Lamont Corp

question 76

Multiple Choice

Lamont Corp.uses no debt.The weighted average cost of capital is 11 percent.The current market value of the equity is $38 million and there are no taxes.What is EBIT?

• A)$3,423,000
• B)$3,508,600
• C)$3,781,100
• D)$3,898,700
• E)$4,180,000

---

Definitions:

Unlevered Cost

The cost of an investment or project without the inclusion of debt, representing the underlying cost to equity holders.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary according to income or profits.

Coupon

The interest rate paid by a bond, typically expressed as a percentage of the bond's face value.

Unlevered Cost

It involves the cost of funding a project or investment without any debt, reflecting the cost of capital that is equity financed.