EBIT of NS Ltd. is 450,000. Debt in capital structure = 900,000. Cost of debt (Kd) = 12%. Cost of equity (Ke) = 15%. Ignore taxation. Total market value of X Ltd. = ? (A) 2,280,000 (B) 3,180,000 (C) 2,180,000 (D) 3,080,000
Added by Jennifer J.
Step 1
This is the cost of debt (Kd) multiplied by the total debt. Interest expense = Kd * Debt = 12% * 900,000 = 108,000 Show more…
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