Edwards Construction currently has debt outstanding with a market value of $75,000 and a cost of 9
Question:
Edwards Construction currently has debt outstanding with a market value of $75,000 and a cost of 9 percent. The company has EBIT of $6,750 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 percent?
c. What are the equity value and debt-to-value ratio if the company's growth rate is 7 percent?
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Input Area Amount of debt 75000 Debt interest rate 9 EBIT 6750 Growth rate 3 Growt...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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