Roxy International Has an EBIT of $25 Million,debt with a Market

question 61

Multiple Choice

Roxy International has an EBIT of $25 million,debt with a market value of $40 Million and a required return on assets of 15%.Assuming no taxes,what is the firm 's value?

• A) $166,666,667
• B) $266,666,667
• C) $291,666,667
• D) $100,000,000

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Definitions:

Fixed Costs

are expenses that do not change in response to the level of goods or services produced by a business, like rent or salaries.

Variable Costs

Expenses that change in proportion to the production or sales figures.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and labor expenses.

Total Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance premiums.