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Edwards Construction currently has debt outstanding with a market value of $ 6 0 , 0 0 0 and a cost of 6 percent. The

Edwards Construction currently has debt outstanding with a market value of $60,000 and a cost of 6 percent. The company has an EBIT of $3,600 that is expected to continue in perpetuity. Assume there are no taxes, the company faces no distress costs, and investors are risk neutral.
a. What is the value of the companys equity? What is the debt-to-value ratio? (Do not round intermediate calculations. Leave no cell blank - be sure to enter "0" wherever required. Omit $ sign in your response.)
Value of equity $
0
Debt-to-value ratio
1
b. What are the equity value and debt-to-value ratio if the companys growth rate is 2.0 percent? (Do not round intermediate calculations. Round "Debt-to-value ratio" answer to 3 decimal places. Omit $ sign in your response.)
Value of equity $
91800
Debt-to-value ratio
c. What are the equity value and debt-to-value ratio if the companys growth rate is 5 percent? (Do not round intermediate calculations. Round "Debt-to-value ratio" answer to 3 decimal places. Omit $ sign in your response.)
Value of equity $
Debt-to-value ratio

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