Question: Exe ltd is comparing two different capital structures .Plan 1 would have 2,300 shares of stock outstanding .Plan 11 would result in 1,100 shares of

  1. Exe ltd is comparing two different capital structures .Plan 1 would have 2,300 shares of stock outstanding .Plan 11 would result in 1,100 shares of stock and kshs 30,000 in debt. The interest rate on the debt is 10%.

Required:

  1. Determine the indifference point.
  2. Which plan will be beneficial to the shareholders?

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