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Required information [The following information applies to the questions displayed below.] All-Canadian, Ltd. is a multiproduct company with three divisions: Pacific Division, Plains Division, and
Required information [The following information applies to the questions displayed below.] All-Canadian, Ltd. is a multiproduct company with three divisions: Pacific Division, Plains Division, and Atlantic Division. The company has two sources of long-term capital: debt and equity. The interest rate on All-Canadian's $406 million debt is 7 percent, and the company's tax rate is 30 percent. The cost of All-Canadian's equity capital is 10 percent. Moreover, the market value of the company's equity is $609 million. (The book value of All-Canadian's equity is $436 million, but that amount does not reflect the current value of the company's assets or the value of intangible assets.) The following data (in millions) pertain to All-Canadian's three divisions. Before-Tax Operating Income $18 51 40 Current Liabilities Division Pacific Plains Atlantic Total Assets $ 76 380 489 2. Compute the economic value added (or EVA) for each of the company's three divisions. (Do not round intermediate calculation Enter your final answers in dollars and not millions.) Division Economic Value Added Pacific Plains Atlantic
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