Question

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


Requirements
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 is9.0%.


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  • CreatedJuly 25, 2014
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