Calculate EVA; Cost of Capital
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The condensed income statement and balance sheet for Indelay, Inc.'s software plant is provided in the attached table.
a. Calculate the plant's EVA. Assume the cost of capital is 14 percent.
b. As the table above shows, the plant is carried on Indelay's books at $165.97 million. However, it is a modern plant, and could be sold to another software company for $250 million. How should this fact change your calculation of EVA?
The solution calculates EVA - cost of capital.