What is the value of the companys equity and the


Edwards Construction currently has debt outstanding with a market value of $270,000 and a cost of 5 percent. The company has an EBIT of $13,500 that is expected to continue in perpetuity. Assume there are no taxes.

a. What is the value of the company’s equity and the debt-to-value ratio? (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Round your debt-to-value answer to 3 decimal places, e.g., 32.161.)

Equity value        $

Debt-to-value

b. What is the equity value and the debt-to-value ratio if the company's growth rate is 3 percent? (Do not round intermediate calculations. Round your equity value to 2 decimal places, e.g., 32.16, and round your debt-to-value answer to 3 decimal places, e.g., 32.161.)

Equity value        $

Debt-to-value

c. What is the equity value and the debt-to-value ratio if the company's growth rate is 4 percent? (Do not round intermediate calculations. Round your equity value to 2 decimal places, e.g., 32.16, and round your debt-to-value answer to 3 decimal places, e.g., 32.161.)

Equity value      $

Debt-to-value

Request for Solution File

Ask an Expert for Answer!!
Financial Management: What is the value of the companys equity and the
Reference No:- TGS02761498

Expected delivery within 24 Hours