Spectrum Book Company has two divisions: The Brick and Mortar division sells books through more than 100 bookstores throughout the United States; the Internet division was formed 18 months ago and sells books via the Internet. Data for the past year are:
|
|
Brick and Mortar
Division |
|
Internet
Division |
| Total assets |
|
$162,700,000 |
|
$15,520,000 |
|
| Noninterest-bearing current liabilities |
|
7,071,000 |
|
2,534,000 |
|
| Net income (loss) |
|
27,720,000 |
|
(1,138,000 |
) |
| Interest expense |
|
1,275,000 |
|
411,100 |
|
| Tax rate |
|
40% |
|
0 |
|
| Cost of capital |
|
10% |
|
12% |
|
Evaluate the two divisions in terms of economic value added (EVA). (Enter negative answers preceeding either - sign, e.g. -45 or in parentheses, e.g. (45).)
|
|
Brick & Mortar
Division |
|
Internet
Division |
| EVA |
|
$ |
|
$ |