What is the equity value and debt to value ratio

Assignment Help Finance Basics
Reference no: EM13299297

Edwards Construction currently has debt outstanding with a market value of $ 90,000 and a cost of 9 percent. The company has an EBIT of $ 8,100 that is expected to continue in perpetuity. Assume there are no taxes.

a. What is the value of the company's equity? What is the debt to value ratio?
b. What is the equity value and debt to value ratio if the company's growth rate is 5 percent?
c. What is the equity value and debt to value ratio if the company's growth rate is 8 percent?

 

Reference no: EM13299297

Questions Cloud

Prepare journal entries issuance of preferred stock for land : Prepare the journal entries for the issuance of preferred stock for land
How many shares will need to be issued : Suppose the company cancels the dividend and announces that it will use the money saved to repurchase shares. What happens to the stock price on the announcement date?
Calculate population in 50 years assuming deometric growth : An intake conduit from a well field used to pump ground water is being designed for a town with a population of 23,000 people. Six years ago the population was 21,500 people. a) assuming deometric growth, calculate the population in 50 years
Find which is produced with emphasis on temporal distributn : You are assigned the task of using bioremediation to cleanup a hazardous waste site contaminated with Tetrachloroethylene. The site is a shallow surficial sandy aquifer 30 feet deep underlain by a clay unit. The depth to the watertable is 10ft.
What is the equity value and debt to value ratio : Edwards Construction currently has debt outstanding with a market value of $ 90,000 and a cost of 9 percent. The company has an EBIT of $ 8,100 that is expected to continue in perpetuity. Assume there are no taxes.
Prepare the companys cash budget for october : Prepare the companys cash budget for October in good form.
When and how are eaas used in capital budgeting : What is an "equvalent annual annuity (EAA) ?" When and how are EAAs used in capital budgeting ?
How many light bulbs could be lit with the wasted power : The flow depth and velocity before the jumo are 0.8 m and 7 m/s respectively. The flow depth and velocity after the jump are 2.46 m and 2.28 m/s respectivly. Assuming a flat channel, determine a) the energy loss due to the jump, hl (head loss)
What is a replacement chain : What is a "replacement chain?" When and how should replacement chain be used in capital budgeting ?

Reviews

Write a Review

Finance Basics Questions & Answers

  Ebit and optimal level of leverage

Describe EBIT and discuss why optimal level of leverage from a tax-saving perspective is the level at which interest equals EBIT.

  Find the value of the decedents gross estate

Assume decedent dies in 2006 and has interests in the following assets: $400,000 residence owned jointly with right of survivorship with her husband;

  Compare and contrast interest rate parity

Compare and contrast interest rate parity, purchasing power parity, and the international fisher effect.

  Determine total profit margin and cash flow

Brandywine Homecare, a non-profit business, had revenues of 12 million dollar in 2007. Expenses other than depreciation totaled 75% of revenues, and depreciation expense was $1.5 million.

  Value of straight-debt

Thomson Engineering is issuing new 30-year bonds that have warrants attached. Which have a par value of $1,000. What is the value of the straight-debt portion of the bonds?

  Direct marketing association

Write down a request to the direct marketing association (DMA) and the three credit bureaus Equifax, Experian, and Trans Union requesting to opt out of pre-approved credit card mailings.

  Knowledge about corporate finance

A corporation has decided to provide the pension for key employee who is scheduled to retire in 12 years-What should the annual payments be in order to fund this pension?

  Marriage penalty-life annuity taxation

Howard and Beatrice plan to marry either immediately before or immediately after year-end. Based on tax considerations, what marriage date would you suggest for loving couple? How much would your choice save in taxes?

  Find the finance charge and the new balance

Phil had an unpaid balance of $1,854.50 on his credit card statement at the starting of December. He made a payment of $45.00 during the month.

  What would happen to the money supply in the two countries

Under the gold standard, if Britain became more productive relative to the United States, what would happen to the money supply in the two countries?

  Find a potential capital project

Find a potential capital project for your company describe such a project and write a short summary of the problems you see in getting the funding to see it through.

  What would the value of the fulton bonds

What would the value of the Fulton bonds at an 8% required interest rate of return if the interest were paid and compounded semiannually?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd