Springfield Corporation, Whose Tax Rate Is 40%, Has Two Sources

question 25

Multiple Choice

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 (EVA®) for the Blue Division?

• A)-$233,400
• B)$21,960
• C)$188,600
• D)$433,960

---

Definitions:

Quasi Contract

An obligation imposed by law to prevent unjust enrichment, in the absence of an actual agreement between the parties involved.

Quasi Contract Theory

A legal concept that allows a court to award damages to a party as if a contract existed, even though one does not, to prevent unjust enrichment.

Nurse Practitioner

A healthcare professional with advanced training, capable of providing some level of care similar to that of a doctor, including diagnosing and treating conditions.

Unconscious

A state in which a person is not awake and not aware of and responding to their environment.