Answer the Following Questions Using the Information Below:
Waldorf Company

question 24

Multiple Choice

Answer the following questions using the information below:
Waldorf Company has two sources of funds: long-term debt with a market and book value of $5 million issued at an interest rate of 12%, and equity capital that has a market value of $4 million (book value of $2 million) . 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 25%.
$$\begin{array} { | l | r | r | r | } \hline & \text { Operating Income } & \text { Assets } & \text { Current Liabilities } \\\hline \text { St. Louis } & \$ 480,000 & \$ 2,000,000 & \$ 100,000 \\\hline \text { Cedar Rapids } & \$ 600,000 & \$ 4,000,000 & \$ 300,000 \\\hline \text { Wichita } & \$ 1,020,000 & \$ 6,000,000 & \$ 600,000 \\\hline\end{array}$$
-What is the EVA for St.Louis?

• A) $127,870
• B) $163,730
• C) $196,270
• D) $360,000

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Definitions:

Evolutionary Perspective

A viewpoint that examines human thoughts, feelings, and behaviors through the lens of natural selection and adaptation.

Behavioral Perspective

A view in psychology that focuses on observable behaviors and the ways they are learned through interaction with the environment.

Psychodynamic Perspective

an approach in psychology which emphasizes the role of unconscious processes and childhood experiences in shaping behavior and personality.

Naturalistic Observation

A research method whereby subjects are observed in their natural habitats without any manipulation by the observer.