Once Bitten Corp. uses no debt. The weighted average cost of capital is 10.4 percent. The...
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Once Bitten Corp. uses no debt. The weighted average cost of capital is 10.4 percent. The current market value of the equity is $18 million and the corporate tax rate is 35 percent. |
| What is EBIT? |
Homework Answers
EBIT = value of equity * WACC / (1- tax rate)............(since there is no debt).
=>18m*10.40% / (1-0.35)
=>$1.872 m / 0.65
=>$1,872,000/0.65
=>$2,880,000.
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