What is the value of the company equity

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Question - Edwards Construction currently has debt outstanding with a market value of $450,000 and a cost of 8 percent. The company has an EBIT of $36,000 that is expected to continue in perpetuity. Assume there are no taxes.

Required -

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

b. What is the equity value and the debt-to-value ratio if the company's growth rate is 3 percent?

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

Reference no: EM133251577

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