What are the equity value and debt-to-value ratio if the, Financial Management

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What are the equity value and debt-to-value ratio if the

Connor Electric currently has debt outstanding with a market value of $70,000 and a cost of 10 percent. The company has EBIT of $7,000 that is expected to continue in perpetuity. Assume there are no taxes.

I. What is the value of the company's equity?

A. $50,000

B. $100,000

C. $0

D. $1,000,000

E. Impossible to calculate with information given.

II. What is the debt-to-value ratio?

A. 1.0

B. 1.9

C. 0.5

D. 1.26

E. Impossible to calculate with information given.

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

A. 0.909

B. 0.954

C. 0.891

D. 0.526

E. Impossible to calculate with information given.

IV. What are the equity value and debt-to-value ratio if the company's growth rate is 9 percent?

A. 0.526

B. 0.909

C. 0.641

D. 1.263

E. Impossible to calculate with information given.

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