Waldorf Company Has Two Sources of Funds: Long-Term Debt with a Market

question 76

Multiple Choice

Waldorf Company has two sources of funds: long-term debt with a market and book value of $5,200,000 issued at an interest rate of 13%, and equity capital that has a market value of $4,200,000 (book value of $2,400,000) . 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 13%, while the tax rate is 35%.

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

• A) $65,739
• B) $51,048
• C) $312,000
• D) $260,952

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Definitions:

Atmosphere

The layers of gas surrounding a planet, held in place by gravity, and composed of various gases that protect and sustain life on Earth by absorbing ultraviolet solar radiation, warming the surface through heat retention, and reducing temperature extremes between day and night.

Photosynthesis

The process by which green plants and some other organisms use sunlight to synthesize foods from carbon dioxide and water. Photosynthesis in plants generally involves the green pigment chlorophyll and generates oxygen as a byproduct.

Cellular Respiration

Metabolic reactions that use the energy from carbohydrate, fatty acid, or amino acid breakdown to produce ATP molecules.

Decomposers

Organisms that break down dead or decaying organisms, contributing to the nutrient cycle by recycling nutrients back into the ecosystem.