Edwards Construction currently has debt outstanding with a market value of $70,000 and a cost of 8%.
Question:
Edwards Construction currently has debt outstanding with a market value of $70,000 and a cost of 8%. The company has EBIT of $5600 that is expected to continue in perpetuity. Assume there are no taxes.
a. What is the value of the company's equity? What is the debt to value ratio?
b. What are the equity value and debt to value ratio if the company's growth rate is 3%?
c. What are the equity value and debt to value ratio if the company's growth rate is 7%?
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a Computation of the Value of Equity and Debt to Value ratio Given information Debt 70000 Cost 8 EBI...View the full answer
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Related Book For 
Corporate Finance
ISBN: 978-0077861759
11th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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