Marshall Industries Operates as an Investment Center

question 48

Essay

Marshall Industries operates as an investment center.Buddy Hall, the region's division manager, has set a required minimum rate of return of 15%.Marshall's total assets are $350,000, current liabilities are $150,000, and operating income is $60,000.The company's weighted-average cost of capital is 18% and its tax rate is 28%.
Required:
Calculate Marshall's EVA.Show your work.

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Definitions:

Self-fulfilling Prophecy

A psychological phenomenon in which an individual's or group's belief or expectation brings about its own fulfillment, either directly or indirectly, influencing behavior and outcomes.

Preexisting Expectations

Assumptions or beliefs that one has before encountering new information or experiences.

Internal Attributions

The tendency to explain one's behavior or the behavior of others based on internal, personal characteristics rather than external situations.

Behavior

The actions, reactions, or conduct of an individual, often studied in psychology to understand individuals and groups.