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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