Lamont Corp. uses no debt. The weighted average cost of capital is 11 percent. The current market value of the equity is $38 million

Lamont Corp. uses no debt. The weighted average cost of capital is 11 percent. The current market value of the equity is $38 million and there are no taxes. What is EBIT?    A.  $3,423,000 B.  $3,508,600 C.  $3,781,100 D.  $3,898,700 E.  $4,180,000 V = $38,000,000 = EBIT/0.11; EBIT = $4,180,000

90.

The SLG Corp. uses no debt. The weighted average cost of capital is 11 percent. The current market value of the equity is $31 million and the corporate tax rate is 34 percent. What is EBIT?    A.  $4,180,000 B.  $4,821,194 C.  $5,166,667 D.  $6,230,018 E.  $6,568,500 VU = $31,000,000 = EBIT (1 - 0.34)/0.11; EBIT = $5,166,667

91.

W.V. Trees, Inc. has a debt-equity ratio of 1.4. Its WACC is 10 percent, and its cost of debt is 9 percent. The corporate tax rate is 33 percent. What is the firm's unlevered cost of equity capital?    A.  12.38 percent B.  12.79 percent C.  13.68 percent D.  14.10 percent E.  14.45 percent WACC = 0.10 = (1/2.4) RE + (1.4/2.4) (0.09) (1 - 0.33); RE = 0.15558 RE = 0.15558 = RU + (RU - 0.09)(1.4)(1 - 0.33); RU = 12.38 percent