Edwards Construction currently has debt outstanding with a market value of $370,000 and a cost of 6 percent. The company has an EBIT of $22,200 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? (Do not round a. intermediate calculations. Round your debt-to-value answer to 3 decimal places, e.g., 32.161. Leave no cells blank - be certain to enter "0" wherever required.) b. What is the equity value and the debt-to-value ratio if the company's growth rate is 3 percent? (Do not round intermediate calculations. Round your equity value to 2 decimal places, e.g., 32.16, and round your debt-to-value answer to 3 decimal places, e.g., 32.161.) c. What is the equity value and the debt-to-value ratio if the company's growth rate is 4 percent? (Do not round intermediate calculations. Round your equity value to 2 decimal places, e.g., 32.16, and round your debt-to-value answer to 3 decimal places, e.g., 32.161.) a. Equity value Debt-to-value b. Equity value Debt-to-value c. Equity value Debt-to-value
Edwards Construction currently has debt outstanding with a market value of $370,000 and a cost of 6 percent. The company has an EBIT of $22,200 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? (Do not round a. intermediate calculations. Round your debt-to-value answer to 3 decimal places, e.g., 32.161. Leave no cells blank - be certain to enter "0" wherever required.) b. What is the equity value and the debt-to-value ratio if the company's growth rate is 3 percent? (Do not round intermediate calculations. Round your equity value to 2 decimal places, e.g., 32.16, and round your debt-to-value answer to 3 decimal places, e.g., 32.161.) c. What is the equity value and the debt-to-value ratio if the company's growth rate is 4 percent? (Do not round intermediate calculations. Round your equity value to 2 decimal places, e.g., 32.16, and round your debt-to-value answer to 3 decimal places, e.g., 32.161.) a. Equity value Debt-to-value b. Equity value Debt-to-value c. Equity value Debt-to-value
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
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Transcribed Image Text:Edwards Construction currently has debt outstanding with a market value of $370,000
and a cost of 6 percent. The company has an EBIT of $22,200 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? (Do not round
a. intermediate calculations. Round your debt-to-value answer to 3 decimal places,
e.g., 32.161. Leave no cells blank - be certain to enter "0" wherever required.)
b. What is the equity value and the debt-to-value ratio if the company's growth rate is 3
percent? (Do not round intermediate calculations. Round your equity value to 2
decimal places, e.g., 32.16, and round your debt-to-value answer to 3 decimal
places, e.g., 32.161.)
c. What is the equity value and the debt-to-value ratio if the company's growth rate is 4
percent? (Do not round intermediate calculations. Round your equity value to 2
decimal places, e.g., 32.16, and round your debt-to-value answer to 3 decimal
places, e.g., 32.161.)
a. Equity value
Debt-to-value
b. Equity value
Debt-to-value
c. Equity value
Debt-to-value
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