A steel maker needs 5,000,000 tons of coal next year. The current market price for coal...
A steel maker needs 5,000,000 tons of coal next year. The current market price for coal is $70.00 per ton. At this price, the firm expects its EBIT to be $500 million. What will the firm's EBIT if the firm enters into a supply contract for coal for a fixed price of $72.00 per ton?
A.$490 million
B.$510 million
C.$500 million
D.$350 million
E.$410 million
Homework Answers
If coal price increased EBIT will increase.
Impact on EBIT = 2*5million = 10 million
Revised EBIT = $500 mil + $10 mil = $510 million
Correct answer is option B. $510 million
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A steel maker needs 5,000,000 tons of coal next year. The
current market price for coal...
A steel maker needs 5,000,000 tons of coal next year. The current market price for coal...
A steel maker needs 5,000,000 tons of coal next year. The current market price for coal is $70.00 per ton. At this price, the firm expects its EBIT to be $500 milion. What will the firm's EBIT if the firm enters into a supply contract for coal for a fixed price of $72.00 per ton? OA. $350 million B. S410 million O C. S490 million O D. S510 million OE. $500 million
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