Question: 1. Based on the following information, determine whether Vertically Integrated Manufacturing (VIM) earned any residual income for its shareholders in 2001: VIM had total

1. Based on the following information, determine whether Vertically Integrated Manufacturing

(VIM) earned any residual income for its shareholders in 2001:

• VIM had total assets of $3,000,000, financed with twice as much debt capital as equity capital.

• VIM’s pretax cost of debt is 6 percent and cost of equity capital is 10 percent.

• VIM had EBIT of $300,000 and was taxed at a rate of 40 percent.

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