Question: Problem 16-10 M and M (LO1] Once Bitten Corp. uses no debt (it is unleveraged). The weighted average cost of capital is 5.2 percent. If

Problem 16-10 M and M (LO1] Once Bitten Corp. uses no

Problem 16-10 M and M (LO1] Once Bitten Corp. uses no debt (it is "unleveraged"). The weighted average cost of capital is 5.2 percent. If the current market value of the equity is $20 million and there are no taxes, what is EBIT? Note: Use the "M&M proposition I formula with taxes" and enter a O for the tax rate and a $0 for debt. Then solve for the EBIT. Use the WACC here as a measure of the unleveraged cost of capital Ru. (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g. 1,500,000, not 1.5) EBIT

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