(Answered) Question - lolas dance studio currently has debt

Accounting

Question - Lola's Dance Studio currently has debt outstanding with a market value of $100,000 and a cost of 8 percent. The company has EBIT of $8,000 that is expected to continue in perpetuity. Assume there are no taxes.

1. What is the value of the company equity?

2. What is the debt to value ratio?

3. What are the equity value and debt to value if the company growth rate is 3%?

4. What are the equity value and debt to value if the company growth rate is 7%?

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