Golden Gate Construction Associates, a real estate developer and building contractor in San 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

$$68$ 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 $15$ percent. Moreover, the market value $($and book value$)$ of Golden

Gate's equity is $$84$ 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:

Required:

Calculate the economic value added $($EVA$)$ for each of Golden Gate Construction Associates'

divisions.

Note: Round your weighted$-$average cost of capital to $3$ decimal places $($i$.$e$.\mathrm{.}123).$ Enter your

answers in millions rounded to $3$ decimal places $($i$.$e$.$ $$1,234,000$ should be entered as $$1\mathrm{.}234).$

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

$$68$ 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 $15$ percent. Moreover, the market value $($and book value$)$ of Golden

Gate's equity is $$84$ 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:

Required:

Calculate the economic value added $($EVA$)$ for each of Golden Gate Construction Associates'

divisions.

Note: Round your weighted$-$average cost of capital to $3$ decimal places $($i$.$e$.\mathrm{.}123).$ Enter your

answers in millions rounded to $3$ decimal places $($i$.$e$.$ $$1,234,000$ should be entered as $$1\mathrm{.}234).$