Problem 17 5 Capital Structure and Growth Edwards Construction currently has debt outstanding with a market value of $93,000 and a cost of 8 percent The company has EBIT of $7,440 that is expected to continue in perpetuity Assume there are no taxes a 1 What is the value of the company's equity (Do not round intermediate calculations Leave no cell blank be certain to enter 0 wherever required ) a 2 What is the debt to value ratio (Do not round intermediate calculations and round your answer to the nearest whole number, e g , 32 ) b What are the equity value and debt to value ratio if the company's growth rate is 3 percent (Do not round intermediate calculations and round your Debt to value answer to 3 decimal places, e g , 32 161 ) c What are the equity value and debt to value ratio if the company's growth rate is 7 percent (Do not round intermediate calculations and round your Debt to value answer to 3 decimal places, e g , 32 161 )

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Problem 17-5 Capital Structure and Growth Edwards Construction currently has debt outstanding with a market value of $93,000 and a cost of 8 percent. The

Problem 17-5 Capital Structure and Growth

Edwards Construction currently has debt outstanding with a market value of $93,000 and a cost of 8 percent. The company has EBIT of $7,440 that is expected to continue in perpetuity. Assume there are no taxes.

a-1.

What is the value of the company's equity? (Do not round intermediate calculations. Leave no cell blank - be certain to enter "0" wherever required.)

a-2.	What is the debt-to-value ratio? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
b.	What are the equity value and debt-to-value ratio if the company's growth rate is 3 percent? (Do not round intermediate calculations and round your "Debt-to-value" answer to 3 decimal places, e.g., 32.161.)
c.	What are the equity value and debt-to-value ratio if the company's growth rate is 7 percent? (Do not round intermediate calculations and round your "Debt-to-value" answer to 3 decimal places, e.g., 32.161.)