Question
Edwards construction currently has debt outstanding with a market value of $420,000 and a cost of 5 percent. The company has an EBIT of $21,000
Edwards construction currently has debt outstanding with a market value of $420,000 and a cost of 5 percent. The company has an EBIT of $21,000 that is expected to continue in perpetuity. Assume there are no taxes.
What is the value of the company's equity and the debt to value ratio?
Equity value
Debt to Value
Assume that the company's growth rate is 3 percent. What is the value of the company's equity and the debt to value ratio now?
Equity Value
Debt to value
Assume that the company's growth rate is 4 percent. What is the value of the company's equity and the debt to value ratio now?
Equity Value
Debt to value
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Foundations Of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
11th Canadian Edition
1259024970, 978-1259265921
