Exercise 13-33 Economic Value Added (EVA); Continuation of Preceding Exercise (LO 13-2) Golden Gate Construction Associates, a real estate developer and building contractor in San Francisco, has two sources of long-term capital debt and equity. The cost to Golden Gate of issuing debt is the after-tax cost of the interest payments on the debt, taking into account the fact that the interest payments are tax deductible. The cost of Golden Gate's equity capital is the investment opportunity rate of Golden Gate's investors, that is, the rate they could earn on investments of similar risk to that of investing in Golden Gate Construction Associates. The interest rate on Golden Gate's $60 million of long-term debt is 7 percent, and the company's tax rate is 30 percent. The cost of Golden Gate's equity capital is 10 percent. Moreover, the market value (and book value) of Golden Gate's equity is $81 million The company has two divisions: the real estate division and the construction division, The divisions' total assets. current liabilities, and before-tax operating income for the most recent year are as follows: Before-Tax Current Operating Division Total Assets Liabilities Income Real estate $ 97,000,000 $5,600,000 $20,900,000 Construction 63,900,000 3,900,000 18,600,000 Required: Calculate the economic value added (EVA) for each of Golden Gate Construction Associates' divisions. (Round your weighted average cost of capital to 3 decimal places (i.e. 123). Enter your answers in millions rounded to 3 decimal places (i.e. 1.234). Division Economic value added (in millions) Real Estate Construction Exercise 13-25 Improving ROI (LO 13-3) The following data pertain to Pensacola Division's most recent year of operations. Income Sales revenue Average invested capital $ 10,520,000 131,500,000 65,750,000 Required: Which of the following ways could improve the Pensacola Division's ROI to approximately 20 percent? (Select all that apply.) OOOL Improve the sales margin to 9 percent by increasing income to $11,835,000 Improve the sales margin to 10 percent by increasing income to $13,150,000. Improve the turnover to 3.2 by decreasing average invested capital to $41,093,750. Improve the turnover to 2.5 by decreasing average invested capital to $52,600,000