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b. Within your company above, the Recruiting Division has $1,200,000 in total assets, which is the...

b. Within your company above, the Recruiting Division has $1,200,000 in total assets, which is the total capital employed by this division. The tax rate is 20% and the Earnings Before Interest and Tax (EBIT) of Recruiting is $100,000. What is the Economic Value Added (EVA) for the Recruiting Division?

*FYI: Cost of Debt = 5.0% (1-.20) = 4.0%

Also the WACC is 7.5% from problem a.

PS. I need to know the steps for the answers for me to understand. Please, and thank you.

c. Is the Recruiting Division adding to the economic value of this company?

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Answer #1

Fomula f EVA Wacox capital rested) Net opeaatog Pro taxe NO PAT Wehare NOPAT us the guno Problem But thave Sin a nae GBIT NOP

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