Olden Company Has a Tax Rate of 40 Percent What Is the EVA If the Before-Tax Operating Income Is

Multiple Choice

Olden Company has a tax rate of 40 percent. Information for the company is as follows: $$\begin{array} { l r c } \text { Mortgage bonds } & \text { Amount } & \text { After-tax Cost } \\\text { Unsecured bonds } & \$ 1,000,000 & 0.048 \\\text { Common stock } & 3,000,000 & 0.050 \\& 6,000,000 & 0.150\end{array}$$ What is the EVA if the before-tax operating income is $1,500,000?

A) $(198,000)
B) $402,000
C) $534,000
D) $1,134,000