Find the value of company equity/ Managerial Economics
Edwards Construction currently has debt outstanding with a market value of $80,000 and cost of 12 percent. The firm has an EBIT rate of $9,600 that is expected to continue in perpetuity. Suppose there are no taxes
a. Find the value of the company’s equity? What is the debt-to-value ratio?
b. Find the equity value and debt-to-value ratio if the company’s growth rate is 5%?
c. Find the equity value and debt-to-value ratio if the company’s growth rate is 10%?
