Dickson Corporation is comparing two different capital structures. Plan I would result in 18,000 shares of stock and $95,000 in debt. Plan II would result in 14,000 shares of stock and $190,000 in debt. The interest rate on the debt is 5 percent. Assume that EBIT will be $90,000. An all-equity plan would result in 22,000 shares of stock outstanding. Ignoring taxes, what is the price per share of equity under Plan I? Plan II? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Plan I Plan II

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Dickson Corporation is comparing two different capital structures. Plan I would result in
18,000 shares of stock and $95,000 in debt. Plan II would result in 14,000 shares of
stock and $190,000 in debt. The interest rate on the debt is 5 percent. Assume that EBIT
will be $90,000. An all-equity plan would result in 22,000 shares of stock outstanding.
Ignoring taxes, what is the price per share of equity under Plan I? Plan II? (Do not round
intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Plan I
Plan II
Transcribed Image Text:Dickson Corporation is comparing two different capital structures. Plan I would result in 18,000 shares of stock and $95,000 in debt. Plan II would result in 14,000 shares of stock and $190,000 in debt. The interest rate on the debt is 5 percent. Assume that EBIT will be $90,000. An all-equity plan would result in 22,000 shares of stock outstanding. Ignoring taxes, what is the price per share of equity under Plan I? Plan II? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Plan I Plan II
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