Dickson Corporation is comparing two different capital structures. Plan I would result in 39,000 shares of stock and $108,000 in debt. Plan II would result in 33,000 shares of stock and $324,000 in debt. The interest rate on the debt is 7 percent. Assume that EBIT will be $160,000. An all-equity plan would result in 42,000 shares of stock outstanding. Ignore taxes. What is the price per share of equity under Plan I? Plan II? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Plan I Plan II $ 152,440.00 137,320.00

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Dickson Corporation is comparing two different capital structures. Plan I would result in 39,000 shares of stock and $108,000 in debt.
Plan II would result in 33,000 shares of stock and $324,000 in debt. The interest rate on the debt is 7 percent. Assume that EBIT will
be $160,000. An all-equity plan would result in 42,000 shares of stock outstanding. Ignore taxes. What is the price per share of equity
under Plan I? Plan II?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
Plan I
Plan II
$
152,440.00
137,320.00
Transcribed Image Text:Dickson Corporation is comparing two different capital structures. Plan I would result in 39,000 shares of stock and $108,000 in debt. Plan II would result in 33,000 shares of stock and $324,000 in debt. The interest rate on the debt is 7 percent. Assume that EBIT will be $160,000. An all-equity plan would result in 42,000 shares of stock outstanding. Ignore taxes. What is the price per share of equity under Plan I? Plan II? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Plan I Plan II $ 152,440.00 137,320.00
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