Thrice Corp. uses no debt. The weighted average cost of capital is 9.9 percent. The current market value of the equity is $18.5 million and the corporate tax rate is 25 percent. What is EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.)

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Asked Nov 5, 2019

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Thrice Corp. uses no debt. The weighted average cost of capital is 9.9 percent. The current market value of the equity is $18.5 million and the corporate tax rate is 25 percent.

What is EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.)

Expert Answer

Step 1

Weighted Average Cost of Capital = 9.9% or 0.099

Market Value of the Equity = $18,500,000

T...

Image Transcription
Market Value of the Equity x Weighted Average Cost of Capital EBIT 1-Tax Rate $18, 500, 000 x 0.099 1-0.25 $1,831, 500 0.75 = $2,442, 000

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