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Vikequeens Inc. has two sources of funds: long-term debt with a market and book value of $20 million issued at an interest rate of
Vikequeens Inc. has two sources of funds: long-term debt with a market and book value of $20 million issued at an interest rate of 6%, and equity capital that has a market value of $6 million (book value of $3 million). Vikequeens Inc. has profit centres in the following locations with the following operating incomes, total assets, and current liabilities. The cost of equity capital is 9%, while the tax rate is 28%. Operating Income Torontonian Kuebac $815,000 $3,750,000 Loosebrick Assets Current Liabilities $800,000 $1,100,000 $5,000,000 $1,200,000 $2,450,000 $9,250,000 $3,180,000 9. What is the for Kuebac? A) $476,250 B) $428,000 C) $415,525 D) $390,000 E) $318,750
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