Ghan Rail Corporation,whose tax rate is 40%,has two sources of funds: long-term debt with a market value of $8 000 000 and an interest rate of 8%,and equity capital with a market value of $12 000 000 and a cost of equity of 12%.Ghan Rail has two operating divisions,the Blue division and the Gold division,with the following financial measures for the current year:
What is Economic Value Added (EVA) for the Blue Division?
A) $433 960
B) $21 960
C) $188 600
D) -$233 400
Correct Answer:
Verified
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