Edwards Construction currently has debt outstanding with a market value of $104,000and a cost of 12 percent. The company has EBIT of $12,480 that is expected to continuein 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 "O" wherever required.)a- What is the debt-to-value ratio? (Do not round intermediate calculations and round2. 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 6percent? (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 10percent? (Do not round intermediate calculations and round your "Debt-to-value" answer to 3 decimal places, e.g., 32.161.)Answer is complete but not entirely correct.a-1. Value of equitya-2. Debt-to-valueratio01b. Equity value116,480b. Debt-to-valuec. Equity valuec. Debt-to-value0.471$11,400 x0.151

Given Data: EBIT12480Debt104000cost of capital12%

Answered: Edwards Construction currently has debt…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Calculate the aftertax cost of debt under each of the following conditions. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) a b с Yield 8.5% 14.5% 12.0% Corporate tax rate 23% 37% 43% Cost of debt % % %
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Edwards Construction currently has debt outstanding with a market value of $155,000 and a cost of 10 percent. The company has EBIT of $15,500 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- What is the debt-to-value ratio? (Do not round intermediate calculations and round 2. 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 5 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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! Required information [The following information applies to the questions displayed below.] Thrillville has $39.3 million in bonds payable. One of the contractual agreements in the bond is that the debt to equity ratio cannot exceed 2.0. Thrillville's total assets are $79.3 million, and its liabilities other than the bonds payable are $9.3 million. The company is considering some additional financing through leasing. Required: 1. Calculate total stockholders' equity using the balance sheet equation. (Enter your answer in millions rounded to 1 decimal place (i.e., $5,500,000 should be entered as 5.5).) Stockholders' Equity minus
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Edwards Construction currently has debt outstanding with a market value of $116,000 and a cost of 12 percent. The company has EBIT of $13,920 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- What is the debt-to-value ratio? (Do not round intermediate calculations and round 2. 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 5 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 8 percent? (Do not round intermediate calculations and round your "Debt-to- value" answer to 3 decimal places, e.g., 32.161.) Answer is complete but not entirely correct. a-1. Value of equity…
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