Question: In Problem 4, use MM Proposition I to find the price per share of equity under each of the two proposed plans. What is the

In Problem 4, use MM Proposition I to find the price per share of equity under each of the two proposed plans. What is the value of the firm?Hale

in Problem

Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 145,000 shares of stock outstanding. Under Plan II, there would be 90,000 shares of stock outstanding and $3,047,000 in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes.

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