Reference no: EM1355957

1. Dominion expects to have net income next year of $24 million and Free Cash Flow of $27 million. Dominion's marginal corporate tax rate is 40%. Dominion's EBIT is closest to:
[Hint: EBIT = NI + Taxes + Interest expense]
$40 Million
$43 million
$45 million
$60 million

2. Dominion expects to have net income next year of $24 million and Free Cash Flow of $27 million. Dominion's marginal corporate tax rate is 40%. If Dominion increases leverage so that its interest expense rises by $1 million, then the amount its net income will change is closest to:
[Hint: (EBIT - Interest Expense - chg IE) x (After-tax cash flow) = NI + chg NI]
-$400,000
-$600,000
$400,000
$600,000