Question
Golden Gate Construction Associates. The company has two divisions: the real estate division and the construction division. The divisions total assets, current liabilities, and before-tax
Golden Gate Construction Associates. 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: DivisionTotal AssetsCurrent LiabilitiesBefore-Tax Operating IncomeReal estate .......................................................................$100,000,000$6,000,000$20,000,000Construction ....................................................................60,000,0004,000,00018,000,000 Required: Calculate the economic value added (EVA) for each of Golden Gate Construction Associ-ates divisions. (You will need to use the weighted-average cost of capital, which was computed in the preceding exercise.) WACC is 11.4%
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