Dickson Corporation is comparing two different capital structures. Plan I would result in 36,000 shares of stock and $103,500 in debt. Plan II would result in 30,000 shares of stock and $310,500 in debt. The interest rate on the debt is 4 percent. Assume that EBIT will be $145,000. An all-equity plan would result in 39,000 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.)

Dickson Corporation is comparing two different capital structures. Plan I would result in 36,000 shares of stock and $103,500 in debt. Plan II would result in 30,000 shares of stock and $310,500 in debt. The interest rate on the debt is 4 percent. Assume that EBIT will be $145,000. An all-equity plan would result in 39,000 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.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 4P

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