Answer the Following Questions Using the Information Below:
Echidna Company

question 25

Multiple Choice

Answer the following questions using the information below:
Echidna Company has two sources of funds: long-term debt with a market and book value of $30 million issued at an interest rate of 10%,and equity capital that has a market value of $18 million (book value of $5 million) .Echidna Company has profit centres in the following locations with the following operating profits,total assets,and current liabilities.The cost of equity capital is 15%,while the tax rate is 30%.
$$\begin{array} { | l | r | r | r | } \hline & \text { Operating Profit } & { \text { Assets } } & \text { Current Liabilities } \\\hline \text { Mt Iron } & \$ 1630000 & \$ 5625000 & \$ 1600000 \\\hline \text { Mt Pilbara } & \$ 2200000 & \$ 7500000 & \$ 2400000 \\\hline \text { Broken Hill } & \$ 4900000 & \$ 13875000 & \$ 6360000 \\\hline\end{array}$$
-What is the EVA for Broken Hill?

• A)$2 678 500
• B)$2 337 400
• C)$2 806 126
• D)$2 630 126

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