Answer the Following Questions Using the Information Below:
Echidna Company

question 26

True/False

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%.
$$\begin{array} { | l | r | r | r | } \hline & \text { Operating Profit } & { \text { Assets } } & \text { Current Liabilities } \\\hline \text { Mt Iron } & \$ 1630000 & \$ 5625000 & \$ 1600000 \\\hline \text { Mt Pilbara } & \$ 2200000 & \$ 7500000 & \$ 2400000 \\\hline \text { Broken Hill } & \$ 4900000 & \$ 13875000 & \$ 6360000 \\\hline\end{array}$$
-Companies that adopt the Economic Value Added (EVA)concept define investment as 'total assets employed minus current liabilities'.

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Definitions:

Inferential Statistics

Statistical methods that allow researchers to make inferences or predictions about a population based on a sample.

Starting Salaries

The initial amount of money an individual earns when beginning a new job position.

Random Error

Variability in data or measurements that arises due to chance and affects the accuracy but not the validity of an experiment.

Inferential Statistics

Statistical methods that allow researchers to make inferences or generalizations from a sample to the population from which it was drawn.