Question

Lakeside Hospital is a division of Superior Healthcare organized as an investment center. In the past year, the hospital reported an after-tax income of $2,500,000.Total interest expense was $1,900,000, and the hospital’s tax rate was 35 percent. Hospital assets totaled $33,000,000, and noninterest-bearing current liabilities were $10,400,000. Superior has established a required rate of return equal to 17 percent of invested capital.

Required
Calculate the residual income/EVA of Lakeside Hospital.



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  • CreatedSeptember 23, 2013
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