Question: Springfield 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

Springfield Corporation, whose tax rate is 40%, has two sources of

Springfield 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%. Springfield has two operating divisions, the Blue division and the Gold division, with the followin financial measures for the current year: Total Assets Current Liabilities Operating Income Blue Div. $9,500,000 $2,800,000 $1,055,000 Gold Div. $11,000,000 $2,200,000 $1,200,000 What is Economic Value Added (EVA) for the Blue Division? a. $233,400 b. $21,960 c. $188,600 d. $433,960

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