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

Haskell Corp. is comparing two different capital structures. Plan I would result in 12,000 shares of stock and $120,000 in debt. Plan II would result in 11,500 shares of stock and $140,000 in debt. The interest rate on the debt is 6 percent. Assume that EBIT will be $70,000. An all-equity plan would result in 15,000 shares of stock outstanding. Ignore 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.)

	Price per share of equity
Plan I	$ per share
Plan II	$ per share

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Expert Solution

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

WHEN TAXES ARE ABSENT, ALL PLAN HAVE SAME PRICE PER SHARE.

SO HERE WE HAVE COMPARED ALL EQUITY PLAN WITH PLAN I

I HAVE ALSO GIVEN VERIFICATION THAT PRICE = 40 GIVES ALL PLANS SAME VALUE OF THE FIRM, WHICH IMPLIES THAT EVERYTHING IS DONE PERFECTLY. THANK YOU

jeff jeffy answered 6 months ago

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