Waldorf Company Has Two Sources of Funds: Long-Term Debt with a Market

Multiple Choice

Waldorf Company has two sources of funds: long-term debt with a market and book value of $5,200,000 issued at an interest rate of 13%, and equity capital that has a market value of $4,200,000 (book value of $2,400,000) . Waldorf Company has profit centers in the following locations with the following operating incomes, total assets, and current liabilities. The cost of equity capital is 13%, while the tax rate is 35%.

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

A) $65,739
B) $51,048
C) $312,000
D) $260,952