Reference no: EM132797373

Roterblade Company supplies helicopters to corporate clients. Roterblade has two sources of funds: long term debt with a market and book value of $32 million issued at an interest rate of 10%, and equity capital that has a market value of $18 million (book value of $8 million). The cost of equity capital for Roterblade is 15%, and its tax rate is 30%. Roterblade has profit centers in four divisions that operate autonomously.

The company's results for 2020 are as follows:

                                   Operating income               Assets                 Current liabilities
New York                   $1,750,000                 $11,500,000         $2,500,000
Chicago                    2,400,000                  9,000,000          3,500,000
Dallas                      4,675,000                   27,500,000         9,500,000
Los Angeles               4,200,000               25,000,000               8,000,000

Problem 1: Compute the Chicago division's Economic Value Added

A $1,494,100
B $335,800
C $1,136,600
D $1,260,400