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  • What Is The Economic Value Added (EVA) ?

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    Heaven Heart
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    The document provides financial information for an investment center, segment A of an unnamed company, and the Motor Division of Eurosun Company. It asks three questions: 1) What is the investment center's economic value added (EVA)? 2) What is segment A's controllable segment profit margin? 3) What is the Motor Division's return on investment? The financial details include assets, liabilities, revenues, costs, capital amounts, interest rates and required returns for each section.

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    The document provides financial information for an investment center, segment A of an unnamed company, and the Motor Division of Eurosun Company. It asks three questions: 1) What is the investment center's economic value added (EVA)? 2) What is segment A's controllable segment profit margin? 3) What is the Motor Division's return on investment? The financial details include assets, liabilities, revenues, costs, capital amounts, interest rates and required returns for each section.

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    3 views1 page

    What Is The Economic Value Added (EVA) ?

    Uploaded by

    Heaven Heart
    The document provides financial information for an investment center, segment A of an unnamed company, and the Motor Division of Eurosun Company. It asks three questions: 1) What is the investment center's economic value added (EVA)? 2) What is segment A's controllable segment profit margin? 3) What is the Motor Division's return on investment? The financial details include assets, liabilities, revenues, costs, capital amounts, interest rates and required returns for each section.

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    of 1

    Consider the following:

    Investment center’s after tax operating profit 50000


    Investment center’s total assets 800000
    Investment center’s current liabilities 80000
    Weighted-average cost of capital 6.5%
    Minimum required ROI 8%

    What is the economic value added (EVA)?

    Segment A generated sales revenue of 400000 and variable operating expenses of 180000. Its
    controllable fixed expenses were 40000. It was assigned 20% of 200000 of fixed costs controlled by
    others. The common fixed costs were 25000.

    What was segment A’s controllable segment profit margin?

    The following data relate to the Motor Division of Eurosun Company:

    Sales 10M
    Variable Cost 3M
    Direct Fixed Cost 5M
    Invested capital 8M
    Allocated actual interest cost 800k
    Capital charge 12%

    The divisional return on investment is?

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