Required: Calculate the EVA for each of Banyan’s divisions. Calculate the residual income (RI) for each of Banyan’s division. If Banyan uses EVA to evaluate the projects, which division has the better project and by how much? If Banyan uses RI, which division has the better project and by how much? What are some of the reasons for the similarity or difference that you found in the use of EVA versus RI?
Banyan Industries has two divisions, a tax rate of 30%, and a minimum
Required:
Calculate the EVA for each of Banyan’s divisions.
Calculate the residual income (RI) for each of Banyan’s division.
If Banyan uses EVA to evaluate the projects, which division has the better project and by how much?
If Banyan uses RI, which division has the better project and by how much?
What are some of the reasons for the similarity or difference that you found in the use of EVA versus RI?
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