Gunnar Corp. uses no debt. The weighted average cost of capital is 8.5 percent. The current...

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Gunnar Corp. uses no debt. The weighted average cost of capital is 8.5 percent. The current...

Gunnar Corp. uses no debt. The weighted average cost of capital is 8.5 percent. The current market value of the equity is $43 million and the corporate tax rate is 21 percent.

What is EBIT?

business finance

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Answer 1

Answer #1

Value of unlevered firm = EBIT*(1-tax rate)/unlevered cost of equity

43 = EBIT*(1-0.21)/0.085

EBIT = 4.626m

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Answer 2

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