1. Suppose that Furman, Inc., had after-tax operating income last year of $1,583,000.Three sources of financing were used by the company: $2 million of mortgage bonds paying 8 percent interest, $3 million of unsecured bonds paying 10 percent interest, and $10 million in common stock, which was considered to be no more or less risky than other stocks. Assume 12% cost of equity. Furman, Inc., pays a marginal tax rate of 40 percent.

1. Calculate EVA

2. Explain behavioural aspect of EVA