Question
In: Finance
Capital Structure and Growth Edwards Construction currently has debt outstanding with a market value of $95,000...
Capital Structure and Growth
Edwards Construction currently has debt outstanding with a market
value of $95,000 and a cost of 9 percent. The company has EBIT of
$8,550 that is expected to continue in perpetuity. Assume there are
no taxes.
a. What is the value of the company's equity? What is the
debt-to-value ratio?
b. What are the equity value and debt-to-value ratio if the
company's growth rate is 3 percent?
c. What are the equity value and debt-to-value ratio if the
company's growth rate is 7 percent?
Show all the steps and don't round off calculations.
Solutions
jeff jeffy answered 2 days agoRelated Solutions
Edwards Construction currently has debt outstanding with a market value of $95,000 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $95,000 and a cost of 9 percent. The company has
EBIT of $8,550 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...
Edwards Construction currently has debt outstanding with a market value of $103,000 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $103,000 and a cost of 12 percent. The company has
EBIT of $12,360 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...
Edwards Construction currently has debt outstanding with a market value of $82,500 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $82,500 and a cost of 7 percent. The company has
EBIT of $5,775 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.) Calculate Value of equity
a-2. What is the debt-to-value ratio? (Do not round intermediate
calculations and round your...
Edwards Construction currently has debt outstanding with a market value of $360,000 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $360,000 and a cost of 7 percent. The company has
an EBIT of $25,200 that is expected to continue in perpetuity.
Assume there are no taxes.
a. What is the value of the company’s equity and
the debt-to-value ratio? (Do not round intermediate
calculations. Leave no cells blank - be certain to enter "0"
wherever required. Round your debt-to-value answer to 3 decimal
places, e.g., 32.161.)
Equity value
?...
Edwards Construction currently has debt outstanding with a market value of $82,500 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $82,500 and a cost of 7 percent. The company has
EBIT of $5,775 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...
Edwards Construction currently has debt outstanding with a market value of $390,000 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $390,000 and a cost of 7 percent. The company has
an EBIT of $27,300 that is expected to continue in perpetuity.
Assume there are no taxes.
a. What is the value of the company’s equity and
the debt-to-value ratio? (Do not round intermediate
calculations. Leave no cells blank - be certain to enter "0"
wherever required. Round your debt-to-value answer to 3 decimal
places, e.g., 32.161.)
Equity
value
$...
Edwards Construction currently has debt outstanding with a market value of $310,000 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $310,000 and a cost of 6 percent. The company has
an EBIT of $18,600 that is expected to continue in perpetuity.
Assume there are no taxes.
a. What is the value of the company’s equity and
the debt-to-value ratio? (Do not round intermediate
calculations. Leave no cells blank - be certain to enter "0"
wherever required. Round your debt-to-value answer to 3 decimal
places, e.g., 32.161.)
Equity
value
$...
Edwards Construction currently has debt outstanding with a market value of $300,000 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $300,000 and a cost of 8 percent. The company has
an EBIT of $24,000 that is expected to continue in perpetuity.
Assume there are no taxes.
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.)...
Edwards Construction currently has debt outstanding with a market value of $400,000 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $400,000 and a cost of 8 percent. The company has
an EBIT of $32,000 that is expected to continue in perpetuity.
Assume there are no taxes. a. What is the value of the company’s
equity and the debt-to-value ratio? (Do not round intermediate
calculations. Leave no cells blank - be certain to enter "0"
wherever required. Round your debt-to-value answer to 3 decimal
places, e.g., 32.161.) Equity value $...
Edwards Construction currently has debt outstanding with a market value of $98,000 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $98,000 and a cost of 7 percent. The company has
EBIT of $6,860 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...
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