Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger

Exercise 21

Economic Value Added
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%.
Refer to the information for Washington Company above.
Required:
1. Calculate the EVA for the Adams Division.
2. Calculate the EVA for the Jefferson Division.
3. CONCEPTUAL CONNECTION Is each division creating or destroying wealth
4. CONCEPTUAL CONNECTION Describe generally the types of actions that Washington's management team could take to increase Jefferson Division's EVA