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Author Question: Springfield Corporation, whose tax rate is 30%, has two sources of funds: long-term debt with a ... (Read 149 times)

cabate

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on: Mar 6, 2021

Question 1

Return on investment can be increased by ________.
◦ increasing current assets
◦ increasing return on sales
◦ decreasing revenues
◦ increasing the debt portion of the capital

Question 2

Springfield Corporation, whose tax rate is 30%, has two sources of funds: long-term debt with a market value of $8,400,000 and an interest rate of 8%, and equity capital with a market value of $14,000,000 and a cost of equity of 13%. Springfield has two operating divisions, the Blue division and the Gold division, with the following financial measures for the current year:

​Total AssetsCurrent LiabilitiesOperating Income
Blue Div.$9,500,000$3,100,000$1,059,000
Gold Div.$11,000,000$2,200,000 $1,200,000
What is Economic Value Added (EVA®) for the Blue Division? (Round intermediary calculations to four decimal places.)
◦ -$86,580
◦ $86,580
◦ $404,280
◦ -$230,550
Horngren's Cost Accounting: A Managerial Emphasis ¦ Datar, Rajan ¦ 16th Edition
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Marked as best answer by cabate on Mar 6, 2021

miss.ashley

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Reply #1 on: Mar 6, 2021
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cabate

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Reply 2 on: Mar 6, 2021
Thanks for the timely response, appreciate it

isabelt_18

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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