Question: foundation, Inc., this comparing two different capital structure, and all equity plan (plan one) and a levered plan (plan 2). Under plan one, the company

foundation, Inc., this comparing two different capital structure, and all equity plan (plan one) and a levered plan (plan 2). Under plan one, the company would have 170,000 shares of stock outstanding. Under plan to, there would be 120,000 shares of stock outstanding and $2.21 million in debt outstanding. The interest rate on the debt is 7% and there are no taxes.

a. Use M & M proposition one to find the price per share

b. What is the value of the firm under each of the two proposed plans?

foundation, Inc., this comparing two different capital structure, and all equity plan

Foundation, Incorporated, Is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan 1, the company would have 170.000 shares of stock outstanding. Under Plan II, there would be 120,000 shares of stock outstanding and $2.21 million in debt outstanding. The interest rate on the debt is 7 percent, and there are no taxes. a. Use M\&M Proposition I to find the price per share. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the value of the firm under each of the two proposed plans? Note: Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32

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