Answer the Following Questions Using the Information Below:
Waldorf Company

question 80

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 $10 million issued at an interest rate of 12%,and equity capital that has a market value of $8 million (book value of $4 million) .Waldorf Company has profit centres in the following locations with the following operating profits,total assets,and current liabilities.The cost of equity capital is 12%,while the tax rate is 25%.
$$\begin{array} { | l | r | r | r | } \hline & \text { Operating Profit } & { \text { Assets } } & \text { Current Liabilities } \\\hline \text { Mildura } & \$ 960000 & \$ 4000000 & \$ 200000 \\\hline \text { Townsville } & \$ 1200000 & \$ 8000000 & \$ 600000 \\\hline \text { Broome } & \$ 2040000 & \$ 12000000 & \$ 1200000 \\\hline\end{array}$$
-What is the EVA for Broome?

• A)$1 530 000
• B)$450 000
• C)$414 360
• D)$1 115 640

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Definitions:

Sample Variance

A measure of the dispersion of a sample dataset, calculating how much the sample data points deviate from the sample mean.

Equal

Being the same in value, quantity, or measure between two or more entities or conditions.

Standard Deviation

A measure that quantifies how much a set of data diverges from its mean value.

Northern States

Geographic region consisting of states located in the northern part of a country, often characterized by specific climatic, cultural, or political attributes.