ABC Corp.'s balance sheet shows its long-term debt to be $20 million. The debt was issued with a 10% interest rate, and the current interest rate is 7%. Based on this information alone, the market value of this debt is most likely: 

1. less than $20 million. 

2. more than $20 million.

3. equal to $20 million. 

4. unknown without knowing the maturity of the debt.

Calculate the EBIT for a firm with $4 million total revenues, $3.5 million cost of goods sold, $500,000 depreciation expense, and $120,000 interest expense.

A. $500,000 

B. $380,000 

C. $0 

D. ($120,000)  

What are the annual sales for a firm with $400,000 in debt, a total debt ratio of .4, and an asset turnover of 3?