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Kolby Corp. is comparing two different capital structures. Plan I would result in 12,000 shares of...

Kolby Corp. is comparing two different capital structures. Plan I would result in 12,000 shares of stock and $100,000 in debt. Plan II would result in 7,200 shares of stock and $160,000 in debt. The interest rate on the debt is 10 percent. Assume that EBIT will be $90,000. An all-equity plan would result in 20,000 shares of stock outstanding. Ignore taxes. What is the price per share of equity under Plan I? Plan II?

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

PRICE PER SHARE = 12.5 FOR BOTH PLAN I AND PLAN II

jeff jeffy answered 1 year ago
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