Question: Two companies with different economic value added EVA profiles are Carolina Oil

Two companies with different economic-value-added (EVA®) profiles are Carolina Oil Pipe-line, Inc., and Indiana Bank Limited. Adapted versions of the two companies’ financial statements are presented here (in millions):

1. Before performing any calculations, which company do you think represents the better investment? Give your reason.
2. Compute the EVA® for each company, and then decide which company’s stock you would rather hold as an investment. Assume that both companies’ cost of capital is 9.5%. (Round your EVA® calculation to the nearest wholenumber.)

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  • CreatedJuly 25, 2014
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