Question
Capital Structure and Growth Edwards Construction currently has debt outstanding with a market value of $75,000 and a cost of 9 percent. The company has
Capital Structure and Growth 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 companys equity? What is the debt-to-value ratio?
b. What are the equity value and debt-to-value ratio if the companys growth rate is 3 percent?
c. What are the equity value and debt-to-value ratio if the companys growth rate is 7 percent?
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The Handbook Of Financial Modeling
Authors: Jack Avon
1st Edition
1430262052, 978-1430262053
