Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Coldbrook Company has two sources of funds: longterm debt with a market and book value of $19,000,000 issued at an interest rate of 10%, and

Coldbrook Company has two sources of funds: longterm debt with a market and book value of $19,000,000 issued at an interest rate of 10%, and equity capital that has a market value of $4,000,000 (book value of $4,500,000).

Coldbrook Company has profit centers in the following locations with the following operating incomes, total assets, and current liabilities. The cost of equity capital is 15%, while the tax rate is 35%.

Operating Income Assets Current Liabilities
Bish Bash Falls $815,000 $3,750,000 $800,000
Brooksville $1,400,000 $5,300,000 $1,200,000
Stonybrook $2,450,000 $9,250,000 $3,180,000

What is the EVA for Brooksville? (Round intermediary calculations to four decimal places.)

image text in transcribed

Coldbrook Company has two sources of funds: long - term debt with a market and book value of $19,000,000 issued at an interest rate of 10%, and equity capital that has a market value of $4,000,000 (book value of $4,500,000 ). Coldbrook Company has profit centers in the following locations with the following operating incomes, total assets, and current liabilities. The cost of equity capital is 15%, while the tax rate is 35%. What is the EVA for Brooksville? (Round intermediary calculations to four decimal places.) A. $393,793 B. $327,180 C. $582,820 D. $910,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Laboratory Auditing For Quality And Regulatory Compliance

Authors: Donald C. Singer, Raluca-Ioana Stefan, Jacobus F. Van Staden

1st Edition

0367392461, 978-0367392468

More Books

Students also viewed these Accounting questions