Figure 19-4
Beta Division had the following information: $\begin{array}{lr}
\text { Asset base in Beta Division } & £ 400,000 \
\text { Net income in Beta Division } & £ 50,000 \
\text { Weighted average cost of capital } & 12 \% \
\text { Target ROI } & 15 \% \
\text { Margin for Beta Division } & 20 \%
\end{array}$
-Refer to Figure 19-4. What is EVA for Beta Division?
A)£60,000
B)£48,000
C)£7,500
D)£2,000

Question

Quizplus · Accepted Answer

EVA (Economic Value Added) is calculated as Net Income - (Asset Base * Weighted Average Cost of Capital). For Beta Division, EVA = £50,000 - (£400,000 * 12%) = £50,000 - £48,000 = £2,000.

Figure 19-4 Beta Division Had the Following Information -Refer to Figure 19-4

Figure 19-4
Beta Division Had the Following Information -Refer to Figure 19-4