Question: DEF Ltd is considering two different financing plans. 1. Under plan I the interest would be 8% on $100,000 face value bonds. 2. Under plan

DEF Ltd is considering two different financing plans.

1. Under plan I the interest would be 8% on $100,000 face value bonds.

2. Under plan II the interest would be $10,125 with 1,400 shares of common stock outstanding.

If the indifference point is $25,000 and the tax rate is 30%, how many shares of common stock are outstanding for plan I?

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