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Compute the company eva for years one and two

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Reference no: EM132551008

The Jeske Company had the following financial results for two recent fiscal years (in millions):

                                                                                                                Year 2                               Year 1

Revenues                                                                                 $4,463                        $4,510

Operating expenses                                                                     $3,569                      $3,615

Cash income taxes                                                                             $292                  $255

Average invested capital (total assets less current liabilities)                     $2,854            $2,689

Question 1: Suppose that Jeske's cost of capital is 11.5%. Compute the company's EVA for years 1 and 2. Assume definitions of after-tax operating income and invested capital as reported in Jeske's annual reports without adjustments advocated by Stern Stewart or others.

Question 2: Discuss the change in EVA between years 1 and 2.

Reference no: EM132551008

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