Use the Information Below to Answer the Following Question(s)

question 104

Multiple Choice

Use the information below to answer the following question(s) .Brandorf Company has two sources of funds: long term debt with a market and book value of $9 million issued at an interest rate of 10 percent; and, equity capital that has a market value of $6 million (book value of $2 million) .The cost of equity capital is 5 percent, while the tax rate is 30 percent.Brandorf Company has profit centres in the following locations with the following data:

-What is EVA for Ottawa?

• A)$218,200
• B)$362,200
• C)$163,200
• D)$480,000
• E)$140,000

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Definitions:

Payroll Activities

The administrative tasks associated with processing employee wages, withholding taxes, and ensuring the accurate calculation of pay.

Payroll Tax

Taxes that are imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.

FICA Taxes

Taxes mandated by the Federal Insurance Contributions Act, which fund Social Security and Medicare, split between employers and employees.

Federal Income Taxes

Charges imposed by the national government on the yearly income of persons, businesses, trusts, and other legal bodies.