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Can someone help on this problem from Ninja MCQ. I’m not sure why the answer $180M (choice D). I recall seeing the same exact question on Wiley TB and the answer there was $60M (choice B).
Zig Corp. provides the following information:
Pretax operating profit $300,000,000
Tax rate 40%
Capital used to generate profits 50% debt, 50% equity $1,200,000,000
Cost of equity 15%
Cost of debt 5%
What of the following represents Zig’s year-end economic value added amount?
A.
$0
B.
$60,000,000
C.
$120,000,000
D.
$180,000,000
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