Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to

Question:

Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year€™s results:

Washington€™s actual cost of capital was 12 percent.

Required:
1. Calculate the EVA for the Adams Division.
2. Calculate the EVA for the Jefferson Division.
3. Is each division creating or destroyingwealth?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...