Olden Company has a tax rate of 40 percent. Information for the company is as follows: $$\begin{array} { l r c }
\text { Mortgage bonds } & \text { Amount } & \text { After-tax Cost } \
\text { Unsecured bonds } & \$ 1,000,000 & 0.048 \
\text { Common stock } & 3,000,000 & 0.050 \
& 6,000,000 & 0.150
\end{array}$$ What is the EVA if the before-tax operating income is $1,500,000?

Question

Olden Company has a tax rate of 40 percent. Information for the company is as follows: $$\begin{array} { l r c } 
\text { Mortgage bonds } & \text { Amount } & \text { After-tax Cost } \
\text { Unsecured bonds } & \$ 1,000,000 & 0.048 \
\text { Common stock } & 3,000,000 & 0.050 \
& 6,000,000 & 0.150
\end{array}$$ What is the EVA if the before-tax operating income is $1,500,000?

Quizplus · Accepted Answer

The Answer of Olden Company has a tax rate of 40 percent. Information for the company is as follows: $$\begin{array} { l r c } 
\text { Mortgage bonds } & \text { Amount } & \text { After-tax Cost } \
\text { Unsecured bonds } & \$ 1,000,000 & 0.048 \
\text { Common stock } & 3,000,000 & 0.050 \
& 6,000,000 & 0.150
\end{array}$$ What is the EVA if the before-tax operating income is $1,500,000?

Olden Company Has a Tax Rate of 40 Percent What Is the EVA If the Before-Tax Operating Income Is