P16-10 M&M [LO1] Wood Corp. uses no debt. The weighted average cost of capital i

Question

P16-10 M&M [LO1]

Wood Corp. uses no debt. The weighted average cost of capital is 13 percent. If the current market value of the equity is $35 million and there are no taxes, EBIT is $. (Do not include the dollar sign ($). Input your answer in dollars, not in millions. (e.g., 1,234,567))

Wood Corp. uses no debt. The weighted average cost of capital is 13 percent. If the current market value of the equity is $35 million and there are no taxes, EBIT is $. (Do not include the dollar sign ($). Input your answer in dollars, not in millions. (e.g., 1,234,567))

Explanation / Answer

Hi,

EBIT = Value of Equity*WACC = 35000000*.13 = 4550000

Answer is 4550000.

Thanks.

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