Waldorf Company has two sources of funds: long−term debt with a market and book value of $5,200,000 issued at an interest rate of 13%, and equity capital that has a market value of $4,200,000 (book value of $2,400,000). 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 13%, while the tax rate is 35%. Operating Income Assets Current Liabilities St. Louis $480,000 $2,600,000 $110,000 Cedar Rapids $600,000 $4,000,000 $300,000 Wichita $1,020,000 $6,000,000 $600,000 What is the EVA® for St. Louis? (Round intermediary calculations to four decimal places.) BIG HINT: The Weighted Average Cost of Capital (WACC) is 10.48% or .1048
Waldorf Company has two sources of funds: long−term debt with a market and book value of $5,200,000 issued at an interest rate of 13%, and equity capital that has a market value of $4,200,000 (book value of $2,400,000). 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 13%, while the tax rate is 35%. Operating Income Assets Current Liabilities St. Louis $480,000 $2,600,000 $110,000 Cedar Rapids $600,000 $4,000,000 $300,000 Wichita $1,020,000 $6,000,000 $600,000 What is the EVA® for St. Louis? (Round intermediary calculations to four decimal places.) BIG HINT: The Weighted Average Cost of Capital (WACC) is 10.48% or .1048
Chapter13: Capital Structure Concepts
Section: Chapter Questions
Problem 6P
Related questions
Question
Waldorf Company has two sources of funds:
cost of equity capital is 13%, while the tax rate is 35%.
long−term
debt with a market and book value of $5,200,000 issued at an interest rate of 13%, and equity capital that has a market value of $4,200,000 (book value of $2,400,000). Waldorf Company has profit centers in the following locations with the following operating incomes, total assets, and current liabilities. The
|
Operating Income
|
Assets
|
Current Liabilities
|
St. Louis
|
$480,000
|
$2,600,000
|
$110,000
|
Cedar Rapids
|
$600,000
|
$4,000,000
|
$300,000
|
Wichita
|
$1,020,000
|
$6,000,000
|
$600,000
|
What is the
EVA®
for St. Louis? (Round intermediary calculations to four decimal places.)BIG HINT: The Weighted Average Cost of Capital (WACC) is 10.48% or .1048
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning