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Irene Corp, whose tax rate is 40%, has two sources of funds:long term debt with a market v

Irene Corp, whose tax rate is 40%, has two sources of funds:long term debt with a market v

Irene Corp, whose tax rate is 40%, has two sources of funds:long term debt with a market value of $8,000,000 with an interestrate of 8%, and equity capital with a market value of $12,000,000and a cost of equity of 12%. Irene has 2 operating divisions, theblue division and the gold division, with the following financialmeasures for the current year:

 

Total Assets

Current Liabilities

Operating Income

Blue Division

9,500,000

2,800,000

1,055,000

Gold Division

11,000,000

2,200,000

1,200,000

What is the economic value added (EVA) for the Bluedivision?

A. ($233,400)

B. $21,960

C. $188,600

D. $433,960

 

Abhinav 04-Dec-2019

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