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Once Bitten Corp. uses no debt. The weighted average cost of capital is 10.4 percent. The...

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?
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Answer #1

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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