Edwards Construction currently has debt outstanding with a market value of $310,000 and a cost of 6
Question:
Edwards Construction currently has debt outstanding with a market value of $310,000 and a cost of 6 percent. The company has an EBIT of $18,600 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 is the equity value and debt-to-value ratio if the company’s growth rate is 2 percent?
c. What is the equity value and debt-to-value ratio if the company’s growth rate is 4 percent?
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a The interest payments each year will be Interest payment 06310000 Interest payment 18600 This is e...View the full answer
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Related Book For 
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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