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Sundance Company had EBIT of $10 million and total capital of $10 million with a debt of $5 million. Cost of debt is 5 percent
Sundance Company had EBIT of $10 million and total capital of $10 million with a debt of $5 million. Cost of debt is 5 percent and cost of equity is 10 percent. The tax rate is 20 percent. The stock is selling at $3 a share and there are 2 million shares outstanding. The economic value added and market value added (to the nearest 0.01m) are respectively:
a) $7.47 million and $1.00 million
b) $7.60 million and $2.00 million
c) $7.27 million and $3.00 million
d) $7.27 million and $1.00 million
e) $7.35 million and $2.00 million
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