Edwards Construction currently has debt outstanding with a market value of $75,000. The company has a WACC of 10 percent. Tax rate is 20%. The company just released its EBIT of $8,750 for the preceding financial year (t = 0). What is the debt-to-value ratio if the company's growth rate is 7 percent? O 0.7 O 0.23 O 0.21 O 0.3
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- 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?Edwards Construction currently has debt outstanding with a market value of $75,000. The company has a WACC of 10 percent. Tax rate is 20%. The company just released its EBIT of $8,750 for the preceding financial year (t = 0). What is the debt-to-value ratio if the company’s growth rate is 7 percent? Group of answer choices 0.23 0.3 0.21 0.7Company Y has a target debt ratio of 55%. Currently its debt ratio is 60% and it expects to revert to the target ratio in the near future. The company has a market cost of equity of 20%. While it has no bonds, it has interest payments of R1 000 000 on liabilities of R10 000 000. Assume the tax rate is 28%. What is the WACC for the company? Ⓒa. 6.36% b. 9.00% c. 12.33% d. 12.96%
- 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%Clam Shack is a seafood company based in Wellington. It currently has debt with a market value of $100,000. The company has a WACC of 9 percent and has EBIT of $9,000 in the next year. The tax rate is 20%. What is the growth rate of EBIT if the debt-value ratio is 50%? 7.2% 5.4% 8.4% 8.5%ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 9 years to maturity that is quoted at 107 percent of face value. The issue makes semiannual payments and has an embedded cost of 6.6 percent annually. What is the company's pretax cost of debt? If the tax rate is 24 percent, what is the aftertax cost of debt? Pretax cost of debt: __________% Aftertax cost of debt: __________%
- Kirk Construction has an outstanding debt with a market value of $75,000. The company's Weighted Average Cost of Capital (WACC) is 10%. Its upcoming Earnings Before Interest and Taxes (EBIT) is $10,000 (t-1). The EBIT is expected to grow by 5% per year indefinitely. The tax rate is 20%. What is the equity value of Kirk Construction? $85,000 $155,000 $160,000 $125,000Viserion, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 28 years to maturity that is quoted at 106 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually. What is the company's pretax cost of debt? multiple choice 1 5.57% 6.69% 4.24% 6.13% 5.02% If the tax rate is 24 percent, what is the aftertax cost of debt? multiple choice 2 4.24% 3.81% 4.66% 5.93% 5.57%Nobleford Inc. is trying to determine its cost of debt. The firm has a debt issue outstanding with 23 years to maturity that is quoted at 97% of face value. The issue makes semiannual payments and has an embedded cost of 5% annually. Assume the par value of the bond is $1,000. What is the company’s pre-tax cost of debt? If the tax rate is 35%, what is the after-tax cost of debt?
- Battlefield is trying to determine its cost of debt. The firm has a debt issue outstanding with seven years to maturity that is quoted at 113% of face value. The issue makes semiannual payments and has an embedded coupon payment of 6.4% annually. If the tax rate is 38%, what is the aftertax cost of debt? 2.01 2.76 2.63 1.89 1.82Viserion, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 16 years to maturity that is quoted at 107 percent of face value. The issue makes semiannual payments and has an embedded cost of 4 percent annually. What is the company's pretax cost of debt? If the tax rate is 25%, what is the aftertax cost of debt?6. Company A maintains a debt equity ratio of 0.7, where debt is the net debt (i.e. debt minus cash). The market value of the firm's equity is $200 million, and the required returns on the firm's equity and debt are 12% and 7%. The firm's marginal tax rate is 35%. A. If the company's free cash flow next year is $7 million, and the free cash flow is expected to grow at a constant rate. What is the growth rate of the free cash flow that is consistent with the company's current value? B. What is the value of the tax shield?