Value of the Company’s Equity Assignment | Homework For You
June 9th, 2020
Edwards Construction currently has debt outstanding with a market value of $100,000 and a cost of 8 percent. The company has EBIT of $8,000 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.) Value of equity
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.) Debt-to-value ratio
b. What are the equity value and debt-to-value ratio if the company’s growth rate is 2.5 percent? (Do not round intermediate calculations and round your “Debt-to-value” answer to 3 decimal places, e.g., 32.161.) Equity value Debt-to-value
c. What are the equity value and debt-to-value ratio if the company’s growth rate is 4.5 percent? (Do not round intermediate calculations and round your “Debt-to-value” answer to 3 decimal places, e.g., 32.161.) Equity value Debt-to-value. Get Finance homework help today