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Author Question: The Tandem division of the Great Adventures Cycles Company had the following results last year (in ... (Read 160 times)

wrbasek0

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The Tandem division of the Great Adventures Cycles Company had the following results last year (in thousands).

Sales $4,000,000
Operating income $480,000
Total assets $2,000,000
Current liabilities $300,000

Management's target rate of return is 10% and the weighted average cost of capital is  8%. Tandem's effective tax rate is 35%.


The Tandem division of the Great Adventures Cycles Company had the following results last year (in thousands).

Sales $4,000,000
Operating income $480,000
Total assets $2,000,000
Current liabilities $300,000

Management's target rate of return is 10% and the weighted average cost of capital is 8%. Its effective tax rate is 40%.

What is the Tandem division's Economic Value Added (EVA)?
◦ $288,000
◦ $280,000
◦ $152,000
◦ $136,000


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Marked as best answer by wrbasek0 on Jan 5, 2020

yasmin

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