HELP
Use the following information to answer questions (29)-(31) 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. 29) The value of the company's equity and the debt-to-value ratio are, respectively. a. $75,000; 1 b. $64,000; 0.5 c$74,500; 0.79 Page 8 of 12 s.com TEST RECORD d. $76,500; 1.1 SO) What are the equity value and debt-to-value ratio if the company's growth rate is 3 percent? a. $4,000; -75 b. $3755;.85 $3,375: 957 d. 83.875: 89 31) What are the equity value and debt-to-value ratio of the company's growth rate is 7 percent? a. $23,625;.76 b. $25.675; -76 c. $24.750;.67 d. $23.975:.67 32)XYZ, Inc. has a weighted average cost of capital of 9.8 percent. The company's cost of equity is 13 percent, and its cost of debt is 6.5 percent. The tax rate is 35 percent. What is XYZ's debt equity ratio? a. 6525 b. 5250 c. 6755 d. .5740 33) Given the following information for Huntington Power Co., find the WACC. Assume the company's tax rate is 35 percent. Debt: 10,000 5.6 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 97 percent of par; the bonds make semi-annual payments. Common stock: 425,000 shares outstanding, selling for $61 per share; the beta is.95. Market: 7 percent market risk premium and 3.8 percent risk-free rate. a. 8.75% b. 8.64% c. 8.15% d. 9.25% Use the following information to answer questions (34)-(36). Franklin Corporation is comparing two different capital structures, an all-equity plan (Plan 1) and a levered plan (Plan II). Under Plan I, the company would have 315,000 shares of stock outstanding. Under Plan II, there would be 225,000 shares of stock outstanding and $4.14 million Page 9 of 12 Use the following information to answer questions (29)-(31) 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. 29) The value of the company's equity and the debt-to-value ratio are, respectively. a. $75,000; 1 b. $64,000; 0.5 c$74,500; 0.79 Page 8 of 12 s.com TEST RECORD d. $76,500; 1.1 SO) What are the equity value and debt-to-value ratio if the company's growth rate is 3 percent? a. $4,000; -75 b. $3755;.85 $3,375: 957 d. 83.875: 89 31) What are the equity value and debt-to-value ratio of the company's growth rate is 7 percent? a. $23,625;.76 b. $25.675; -76 c. $24.750;.67 d. $23.975:.67 32)XYZ, Inc. has a weighted average cost of capital of 9.8 percent. The company's cost of equity is 13 percent, and its cost of debt is 6.5 percent. The tax rate is 35 percent. What is XYZ's debt equity ratio? a. 6525 b. 5250 c. 6755 d. .5740 33) Given the following information for Huntington Power Co., find the WACC. Assume the company's tax rate is 35 percent. Debt: 10,000 5.6 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 97 percent of par; the bonds make semi-annual payments. Common stock: 425,000 shares outstanding, selling for $61 per share; the beta is.95. Market: 7 percent market risk premium and 3.8 percent risk-free rate. a. 8.75% b. 8.64% c. 8.15% d. 9.25% Use the following information to answer questions (34)-(36). Franklin Corporation is comparing two different capital structures, an all-equity plan (Plan 1) and a levered plan (Plan II). Under Plan I, the company would have 315,000 shares of stock outstanding. Under Plan II, there would be 225,000 shares of stock outstanding and $4.14 million Page 9 of 12
