A Steel Maker Needs 5,000,000 Tons of Coal Next Year

Multiple Choice

A steel maker needs 5,000,000 tons of coal next year.The current market price for coal is $70.00 per ton.At this price,the firm expects its EBIT to be $500 million.What will the firm's EBIT if the firm enters into a supply contract for coal for a fixed price of $72.00 per ton?

A) $500 million
B) $510 million
C) $490 million
D) $350 million
E) $410 million