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agasfer [191]
3 years ago
6

Scarlett Corp. uses no debt. The weighted average cost of capital is 8.4 percent. If the current market value of the equity is $

25 million and there are no taxes, what is EBIT?
Business
1 answer:
prohojiy [21]3 years ago
5 0

Answer:

EBIT $2,100,000

Explanation:

WACC=EBIT/(V+D)

8.4%=EBIT/$25,000,000

EBIT=25,000,000*8.4%

EBIT=$2,100,000

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Compared to commercial banks, finance companies usually signal solvency and safety concerns by
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ssume that interest rate parity exists. You expect that the one-year nominal interest rate in the U.S. is 7%, while the one-year
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