Nina Corp. uses no debt. The weighted average cost of capital is 14 percent. If the current market value of the equity is $ 35 million and there are no taxes, EBIT is
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EBIT calculation
11y ago#1Is this supposed to be a question?
WACC is not examinable in Paper F3.
However, I assume that your professor has given you this question as well!!
The only possible answer is that EBIT is 14% X 35M
However, I suggest that you inform your professor that the cost of equity (which equals WACC since it is all equity) is calculated on expected dividends, not on EBIT, and that the level of dividends and the expected growth in dividends is not the same as EBIT)
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