Iron Bark Ltd is a company that provides timber products for the construction industry in Australia. It has two business units, located in Adelaide and Perth. The company applies a hurdle rate of 25% as its expected return on projects. The table below contains information relating to these business units. Business Unit Assets ($m) Capital Allocated ($m) Risk Adjusted Net Economic Income ($m) Capital ($m) Adelaide Perth 8,000 5,000 13,500 9,000 2,100 2,800 4,800 5,075 The correlation between the business units has been estimated at 0.75 MFL is considering a re-allocation of capital within the firm and has decided to allocate capital to the Perth business unit using the Splitting Method. The total allocation of capital required to cover the EC requirement in Perth ($m) is: $7,585 $9,010 $8,314 $7.410 $6,525