Des Chatels Corp. is comparing two different capital structures. Plan I would result in 13,000 shares of stock and $130,500 in debt. Plan Il would result in 10,400 shares of stock and $243,600 in debt. The interest rate on the debt is 10%. Assume that EBIT will be $56,000. An all-equity plan would result in 16,000 shares of stock outstanding. Ignore taxes. What is the price per share of equity under Plan I? Plan II? (Round the final answers to 2 decimal places. Omit $ sign in your response.) Price per share of equity_ Plan I Plan II $
Des Chatels Corp. is comparing two different capital structures. Plan I would result in 13,000 shares of stock and $130,500 in debt. Plan Il would result in 10,400 shares of stock and $243,600 in debt. The interest rate on the debt is 10%. Assume that EBIT will be $56,000. An all-equity plan would result in 16,000 shares of stock outstanding. Ignore taxes. What is the price per share of equity under Plan I? Plan II? (Round the final answers to 2 decimal places. Omit $ sign in your response.) Price per share of equity_ Plan I Plan II $
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Des Chatels Corp. is comparing two different capital structures. Plan I would result in 13,000 shares of stock and $130,500 in debt.
Plan Il would result in 10,400 shares of stock and $243,600 in debt. The interest rate on the debt is 10%. Assume that EBIT will be
$56,000. An all-equity plan would result in 16,000 shares of stock outstanding. Ignore taxes.
What is the price per share of equity under Plan I? Plan II? (Round the final answers to 2 decimal places. Omit $ sign in your
response.)
Price per share of
equity
$
Plan I
Plan II
$
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