Question: Foundation, Inc., is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company

Foundation, Inc., is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company

Foundation, Inc., 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 125,000 shares of stock outstanding and $716,000 in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes. Use M&M Proposition I to find the price per share of equity under each of the two proposed plans. What is the value of the firm? Input Area: Plan 1: Shares outstanding 145,000 Plan II: Shares outstanding 125,000 Debt outstanding $716,000 Interest rate 8% EBIT $300,000 BEBIT $600,000 (Use cells A6 to B13 from the given inform 2 EBIT 3 EBIT 4 $300,000 $600,000 5 (Use cells A6 to B13 from the given information to complete this question.) 6 7 Output Area: 8 9 Price 0 V (1) 1 V (II) 2 3

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