Question: Firefly Travel Services has recently shifted its performance measurement system to include Economic Value Added (EVA). The Firefly accountant gathered the following data for 2012:

Firefly Travel Services has recently shifted its performance measurement system to include Economic Value Added (EVA®). The Firefly accountant gathered the following data for 2012:

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 300,000

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,220,000

Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000

The average tax rate on income for Firefly Travel Services is 32%. Assume that the WACC is 17%. Compute Firefly’s EVA®.

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