Waldorf Company has two sources of funds: long-term debt with a market and book value of $5,400,000 issued at an interest rate of 12%,and equity capital that has a market value of $4,300,000 (book value of $2,100,000) .Waldorf Company has profit centers in the following locations with the following operating incomes,total assets,and current liabilities.The cost of equity capital is 12%,while the tax rate is 35%.

What is the EVA^® for Wichita? (Round intermediary calculations to four decimal places. )

Question

Waldorf Company has two sources of funds: long-term debt with a market and book value of $5,400,000 issued at an interest rate of 12%,and equity capital that has a market value of $4,300,000 (book value of $2,100,000) .Waldorf Company has profit centers in the following locations with the following operating incomes,total assets,and current liabilities.The cost of equity capital is 12%,while the tax rate is 35%.

What is the EVA^® for Wichita? (Round intermediary calculations to four decimal places. )

Quizplus · Accepted Answer

Wichita ()= ($1,500,000 × 0.65)- [(0.0966 × ($6,400,000 - $800,000)] = $434,040
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Waldorf Company Has Two Sources of Funds: Long-Term Debt with a Market