Price Per Share of Equity Assignment
February 18th, 2020
Kolby Corp. is comparing two different capital structures. Plan I would result in 10,000 shares of stock and $100,000 in debt. Plan II would result in 5,000 shares of stock and $200,000 in debt. The interest rate on the debt is 6 percent. Assume that EBIT will be $60,000. 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?
Plan 1: $ ______per share Plan 2: $_______per share |
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