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What is the equity value and the debt-to-value ratio

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Edwards Construction currently has debt outstanding with a market value of $280,000 and a cost of 6 percent. The company has an EBIT of $16,800 that is expected to continue in perpetuity. Assume there are no taxes.

Problem a. What is the value of the company's equity and the debt-to-value ratio?

Problem b. What is the equity value and the debt-to-value ratio if the company's growth rate is 4 percent?

Problem c. What is the equity value and the debt-to-value ratio if the company's growth rate is 5 percent?

Reference no: EM132913868

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