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What is the value of the company equity

Capital Structure Growth:

Problem: Edwards Construction currently has debt outstanding with a market value of $80,000 and cost of 12%. The company has an EBIT rate of $9,600 that is expected to continue in perpetuity. Assume there are no taxes

1) What is the value of the company's equity? What is the debt-to-value ratio?

2) What are the equity value and debt-to-value ratio if the company's growth rate is 5%?

3) What are the equity value and debt-to-value ratio if the company's growth rate is 10%?

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Solution Preview :

Prepared by a verified Expert

Managerial Economics: What is the value of the company equity

Reference No:- TGS01751785

Have a Question? (oR Write a Review)

Recent Questions Asked Managerial Economics

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Solution Preview :

Prepared by a verified Expert

Managerial Economics: What is the value of the company equity

Reference No:- TGS01751785

Recent Questions Asked Managerial Economics

Q : Desirability of the projects

Q : Making a decision to engage in fdi or licensing

Q : Create job description and specifications for your dream job

Q : Risk-neutral probability of the stock

Q : What is the value of the company equity

Q : What is the estimate of stocks current price

Q : Todays market and the corporate bond yields

Q : Use the weighted-average-cost-of-capital approach

Q : Source of business risk

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