Division Corporation is comparing two different capital structures. Plan I would result in 26,000 shares of stock and $85,500 in debt. Plan II would result in 20,000 shares of stock and $256,500 in debt. The interest rate on the debt is 6 percent. Assume that EBIT will be $95,000. An all-equity plan would result in 29,000 shares of stock outstanding. Ignore taxes. What is the price per share of equity under Plan I? Plan II? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Plan I Plan II

Division Corporation is comparing two different capital structures. Plan I would result in 26,000 shares of stock and $85,500 in debt. Plan II would result in 20,000 shares of stock and $256,500 in debt. The interest rate on the debt is 6 percent. Assume that EBIT will be $95,000. An all-equity plan would result in 29,000 shares of stock outstanding. Ignore taxes. What is the price per share of equity under Plan I? Plan II? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. 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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