The Jeske Company had the following financial results for two recent fiscal years (in millions):
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.
2. Discuss the change in EVA between years 1 and 2.