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Edwards Construction currently has debt outstanding with a market value of $103,000 and a cost of 12 percent. The company has EBIT of $12,360 that is...
Edwards Construction currently has debt outstanding with a market value of $103,000 and a cost of 12 percent. The company has EBIT of $12,360 that is expected to continue in perpetuity. Assume there are no taxes.
1.
What is the value of the company's equity?
Value of equity?
2.What is the debt-to-value ratio?
Debt-to-value ratio?
b.What are the equity value and debt-to-value ratio if the company's growth rate is 4 percent?
Equity value? Debt-to-value?
c.What are the equity value and debt-to-value ratio if the company's growth rate is 8 percent?
Equity value? Debt-to-value?
