EVA is used by top management at College Learning Technologies to measure and evaluate the performance of segment managers The company 's cost of capital is 11 percent In 2010, its Audio Visual subsidiary generated after tax income of $2,260,000, with $8,900,000 fair market value of invested capita...

a EVA AfterTax Income Cost of Capital x FMV of Capital 2260000 011 x 8900000 2260000 979000 1281000 ...

EVA is used by top management at College Learning Technologies to measure and evaluate the performance of

Question:

EVA is used by top management at College Learning Technologies to measure and evaluate the performance of segment managers. The company's is 11 percent. In 2010, its Audio/Visual subsidiary generated after-tax income of $2,260,000, with $8,900,000 fair market value of invested capital.
a. Compute the subsidiary's EVA.
b. As the controller of College Learning Technologies, how would you determine the fair value of capital investment for a particular division?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...