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

Answer: C