What is the value of the companys equity what is the debt


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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Finance Basics: What is the value of the companys equity what is the debt
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