Marcia Consumer Products has several divisions, including the Education Division and the Recreation Division. Data on the two divisions are shown here: How much is the EVA for the Education Division?

Question

Marcia Consumer Products has several divisions, including the Education Division and the Recreation Division. Data on the two divisions are shown here:  How much is the EVA for the Education Division?

Quizplus · Accepted Answer

To calculate EVA, we need to subtract the cost of capital from the NOPAT.

For the Education Division:

- NOPAT = $85,000 
- Cost of Capital = $90,600 x 10% = $9,060 
- EVA = NOPAT - Cost of Capital = $85,000 - $9,060 = $75,940

Therefore, the EVA for the Education Division is ($5,600) since it is negative.

Marcia Consumer Products Has Several Divisions, Including the Education Division