Edwards Construction currently has debt outstanding with a market value of $98,000 and a cost of 10 percent. The company has EBIT of $9,800 that is expected to continue in perpetuity. Assume there are no taxes. a-1. What is the value of the company's equity?   a-2. What is the debt-to-value ratio?   b. What are the equity value and debt-to-value ratio if the company's growth rate is 4 percent?   c. What are the equity value and debt-to-value ratio if the company's growth rate is 8 percent

Here is Icknield’s market-value balance sheet (figures in $ millions): Net working capital $550 Debt $800 long term assets $2,150 Equity $1,900 value of firm $2,700   $2,700 The debt is yielding 7%, and the cost of equity is 14%. The tax rate is 21%. Investors expect this level of debt to be permanent.  a. What is Icknield’s WACC?   b. How would the market-value balance sheet change if Icknield retired all its debt?

What is the ROE for a firm with a times interest earned ratio of 2, a tax liability of $1 million, and interest expense of $1.68 million if equity equals $1.68 million? O 23.81% O 25.22% 33.60% 40 48% 21

A company currently has a WACC of 10.6 percent and no debt. The tax rate is 21 percent. a. What is the company’s current cost of equity? b. If the firm converts to 40 percent debt with a cost of 6%, what will its cost of equity be? And the WACC? c. If the firm converts to 60 percent debt with a cost of 6% , what will its cost of equity be? And the WACC? d. What can you conclude from the values of the cost of equity and WACC obtained in b. and c. Please show excel formulas

Edwards Construction currently has debt outstanding with a market value of $75,000. The company has a WACC of 9 percent and has EBIT of $8,750 in the next year. The tax rate is 20%. What is the debt-to-value ratio if the EBIT’s growth rate is 5%?   a. 42.86% b. 39.33% c. 96.42% d. 32.45%

Now (use the following information) suppose that: The cost of debt (ra) is 3.875% (before tax), • Flotation costs (F) = 7% of issue price, The debt is trading at $1,025.00, There are 7,250 bonds outstanding, • The tax rate is .35, The LAST dividend paid yesterday (Do) = $4.56, The expected constant growth rate (g) = 2.75%, Beta = 1.55, TRF = 1.14%, = 4.5%, (market risk premium) The firm has 250,000 shares of common stock outstanding, Common stock shares are trading at $47.32/share (Po). RPm Given the above information, what is the Market value of the firm's debt? $. Given the above information, what is the Market value of the firm's equity? $. Now calculate the weight of debt for the firm (Wa). You will use this to calculate the WACC. Now calculate the weight of equity for the firm (Wee). You will use this to calculate the WACC. What is the cost of existing common equity (retained earnings)? (Briefly describe your approach/method as well as your answer) What is the cost of NEW common…

only looking for parts c-1 and c-3

a firm has a debt-to-equity ratio of 1.0. if we assume that the firm's debt pays 11% interest annualy, the equity has a 19% annual return, and the tax rate is 40%, then what is the firms WACC?

Stevenson's Bakery is an all-equity firm that has projected perpetual EBIT of $183,000 per year. The cost of equity is 13.1 percent and the tax rate is 21 percent. The firm can borrow perpetual debt at 6.3 percent. Currently, the firm is considering converting to a debt–equity ratio of .93. What is the firm's levered value? MM assumptions hold.   A. $829,786   B. $1,215,262   C. $1,155,579   D. $997,511   E. $921,985

Which statement is correct?a. The cost of debt is determined by taking the present value of the interest payments and principal times one minus the tax rate.b. The difference in computing the cost of capital between using the accumulated profits and issuance of new ordinary shares is the growth rate.c. Increase in flotation costs, increase in the company’s beta and increase in the expected inflation will all lead to d. increase the company’s weighted average cost of capital.e. Increasing the company’s dividend payout would mitigate the company’s need to raise new ordinary shares.f. none of the above