Edwards construction currently has debt outstanding with a


Edwards Construction currently has debt outstanding with a market value of $90,000 and a cost of 11 percent. The company has EBIT of $9,900 that is expected to continue in perpetuity. Assume there are no taxes.

1) What is the value of the company's equity?

1-a) What is the debt-to-value ratio?

2) What are the equity value and debt-to-value ratio if the company's growth rate is 2 percent?

3) What are the equity value and debt-to-value ratio if the company's growth rate is 6 percent?

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Financial Management: Edwards construction currently has debt outstanding with a
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