savthespice
savthespice
05.05.2020 • 
Business

Bellwood Corp. is comparing two different capital structures.
Plan I would result in 34,000 shares of stock and $97,500 in debt. Plan II would result in 28,000 shares of stock and $292,500 in debt. The interest rate on the debt is 6 percent. Assume that EBIT will be $135,000. An all-equity plan would result in 37,000 shares of stock outstanding. Ignore taxes.
What is the price per share of equity under Plan I? Plan II?

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