Question: Cooke Co. is comparing two different capital structures. Plan I would result in 8,000 shares of stock and $396,000 in debt. Plan II would result

Cooke Co. is comparing two different capital structures. Plan I would result in 8,000 shares of stock and $396,000 in debt. Plan II would result in 13,100 shares of stock and $227,700 in debt. The interest rate on the debt is 9 percent. The all-equity plan would result in 20,000 shares of stock outstanding. Ignore taxes for this problem.

Required:

(a)

What is the price per share of equity under Plan I?

(b)

What is the price per share of equity under Plan II?

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