Forma 113 Part C Your company had after-tax operating income last year of $3,710,000. Three sources of financing were used by the company: S1 milion of mortgage bonds paying 17 percent interest, $8 million of unsecured bonds paying 17 percent interest, and $8 million in common stock, which was considered to be no more or less risky than other stocks. (Over ime, stockholders have received an average return that is 8 percentage points higher thar the return on long-term government bonds.) The rate of return on long-term U.S. Treasury bonds is 8 percent. Your company pays a marginal tax rate of 32 percent 9 L0 1) Use for form below to calculate your EVA. Calculate the after-tax cost of each method of financing 13 Mortgage Bonds Unsecured Bonds Common Stock 15 17 Calculate the weighted average cost of capital Proportional Share of Mortgage Bonds Proportional Share of Unsecured Bonds Proportional Share of Common Stock Weighted Cost of Mortgage Bonds Weighted Cost of Unsecured Bonds Weighted Cost of Common Stock Weighted Average Cost of Capital 19 20 21 23 24 25 26 27 28 Calculate the total dollar cost of capital employed Calculate the EVA 2) Interpret your EVA. 31 32 34 35