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JenCo has two divisions, a tax rate of 37%, and a minimum rate of return of 19%. Division A has a weighted average cost of
JenCo has two divisions, a tax rate of 37%, and a minimum rate of return of 19%. Division A has a weighted average cost of capital of 15% and is looking at a new project that will generate a profit of $780,000 from a machine that costs $3,900,000. Division B has a weighted average cost of capital of 8% and is looking at a new project that will generate a profit of $1,530,000 from a machine that costs $5,100,000. a) Calculate the EVA for each of JenCo's divisions. b) Calculate the RI for each of JenCo's divisions. Division A RI =$ Division B RI = \$ c) If JenCo uses EVA to evaluate the projects, which division has the better project and by how much? d) If JenCo uses RI, which division has the better project and by how much
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