Question: EBIT = $400,000, T = 40%, g = 4%, rsU= 15% , rd= 5%, Debt = $1.2M. Required reinvestment in net operating assets = 10%

EBIT = $400,000, T = 40%, g = 4%, rsU= 15% , rd= 5%, Debt = $1.2M.

Required reinvestment in net operating assets = 10% of EBIT

Based on the above information, what is the value of theunleveredcompany, VU, if EBIT grows at 4% according to the extension of MM by including the growth?

a.$1.82M

b.$2.18M

c.$1.60M

d.$1.34M

e.$2.07

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