Answer the following question(s)using the information below:
Springfield Corporation, whose tax rate is 40%, has two sources of funds: long-term debt with a market value of $8,000,000 and an interest rate of 8%, and equity capital with a market value of $12,000,000 and a cost of equity of 12%.Springfield has two operating divisions, the Blue division and the Gold division, with the following financial measures for the current year:

-What is Economic Value Added ( )for the Blue Division?
A)-$233,400
B)$21,960
C)$188,600
D)$433,960
E)-$63,800

Question

Answer the following question(s)using the information below:
Springfield Corporation, whose tax rate is 40%, has two sources of funds: long-term debt with a market value of $8,000,000 and an interest rate of 8%, and equity capital with a market value of $12,000,000 and a cost of equity of 12%.Springfield has two operating divisions, the Blue division and the Gold division, with the following financial measures for the current year:
 
-What is Economic Value Added (  )for the Blue Division?
A)-$233,400 
B)$21,960 
C)$188,600 
D)$433,960 
E)-$63,800

Quizplus · Accepted Answer

The Answer of Answer the following question(s)using the information below:
Springfield Corporation, whose tax rate is 40%, has two sources of funds: long-term debt with a market value of $8,000,000 and an interest rate of 8%, and equity capital with a market value of $12,000,000 and a cost of equity of 12%.Springfield has two operating divisions, the Blue division and the Gold division, with the following financial measures for the current year:
 
-What is Economic Value Added (  )for the Blue Division?
A)-$233,400 
B)$21,960 
C)$188,600 
D)$433,960 
E)-$63,800

Answer the Following Question(s)using the Information Below