Question: Destin Corp. is comparing two different capital structures. Plan I would result in 10,000 shares of stock and $90,000 in debt. Plan II would result

Destin Corp. is comparing two different capital structures. Plan I would result in 10,000 shares of stock and $90,000 in debt. Plan II would result in 7,600 shares of stock and $198,000 in debt. The interest rate on the debt is 10 percent.

Assume that EBIT will be $48,000. An all-equity plan would result in 12,000 shares of stock outstanding. Ignore taxes.

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

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