Now you'll put what you what we learned about value-based managementand residual income into practice. Read over the Valmont Industries,Inc. case and complete this assignment. Recognize that your residualincome or EVA is a single-period historical measure and does notdefinitively tell you what should be done in the future. You want to usethe data in the case to develop your inputs and outline the assumptionsthat you are making and describe the calculations employed to developyour estimates. The basic EVA calculation for Valmont as a whole isprovided in the Valmont Spreadsheet.

Youshould present your findings in a report to the CFO not to exceed twopages (typed, double-spaced, 12-point font, one-inch margins) plusexhibits. Your report should contain an introduction, a summary of youranalysis, and a conclusion. You will want to use an Excel spreadsheet todo the analysis for this assignment, but any exhibits should beproduced in MS Word. You should upload only one Wordfile containing the text of your report plus exhibits. Use the followingquestions to focus your analysis, but your report should not be inquestion-and-answer format.

1. Why do you think Valmont's stock has "fallen out offavor" with Wall Street analysts? Do you think EVA can solve Valmont'sstock price problem? Review the spreadsheet provided that computes EVAfor Valmont and use this analysis to support your answer.
2. Using the financial data in Exhibit 5, and elsewhere,and assuming 10% as the WACC and 35% as the tax rate, compute EVA forValmont's business segments for the years 1990-1993. Compute forIrrigation and for the Industrial Construction and Valmont Electricunits of the Industrial Products segment. You should also consider theEVA of segment competitors to get a sense of industry conditions forthose segments. What conclusions can you draw? For example, shouldValmont expand or contract Irrigation? Can you use EVA to help formulatethe strategic direction of Valmont? Compute invested capital for a yearas Beginning-of-Year Assets minus Accounts Payable minus Other AccruedLiabilities.

Structure your report as a business memo, and usethe questions as a guide of what to cover. Write clearly, using propergrammar and punctuation.