SOLUTION: Hello People, Im trying to solve an equation for Corporate finance for which the answer is already given, namely the following one: EBIT

SOLUTION: Hello People, Im trying to solve an equation for Corporate finance for which the answer is already given, namely the following one: EBIT - 7.2 million = 1.11 x (EBIT-11.25 mill

Question 1082965: Hello People,
Im trying to solve an equation for Corporate finance for which the answer is already given, namely the following one:
EBIT - 7.2 million = 1.11 x (EBIT-11.25 million))
EBIT= 47.700
How did they come with the 47.700 million?
Kind regards
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
i believe it is just an application of algebraic principles.

let E represent EBIT.

your equation becomes E - 7.2 = 1.11 * (E - 11.25)

simplify to get E - 7.2 = 1.11 * E - 1.11 * 11.25

simplify further to get E - 7.2 = 1.11 * E - 12.4875

subtract E from both sides of the equation and add 12.4875 to both sides of the equation and you wind up with:

12.4875 - 7.2 = 1.11 * E - E

simplify to get:

5.2875 = .11 * E

divide both sides of this equation by .11 to get:

5.2875 / .11 = E

solve for E to get:

E = 48.06818182

that's not exactly 47.7, but it's pretty close.

why their answer is different from this, i don't know.

if the EBIT on the left side of the equation is the same EBIT as on the right side of the equation, the answer shown is the one you should have gotten, as far as i can see.

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