Question: 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

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?

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

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