Table 12.5 shows a condensed income statement and balance sheet for Androscoggin Copper’s Rumford smelting plant.
a. Calculate the plant’s EVA. Assume the cost of capital is 9%.
b. As Table 12.5 shows, the plant is carried on Androscoggin’s books at $48.32 million. However, it is a modern design, and could be sold to another copper company for $95 million. How should this fact change your calculation of EVA?
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