Answer the Following Question(s)using the Information Below

question 9

Multiple Choice

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

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Definitions:

Student T-Distributed

Pertaining to a probability distribution that arises when estimating the mean of a normally distributed population in situations where the sample size is small and population standard deviation is unknown.

Sampled Population

The subset of a larger population that is selected for the purpose of a scientific study or statistical analysis.

Degrees Of Freedom

A concept in statistics referring to the number of independent values or quantities which can vary in the computation of a statistic, often related to the number of observations in a sample minus the number of restrictions or parameters.

T-Distribution

A type of probability distribution that is symmetric and bell-shaped, used in statistics for small sample sizes when the population variance is unknown.