Question: Johns Cakes is considering two different financing plans. Under plan I the interest would be 10% on $100,000 face value bonds, with 2,000 shares of

Johns Cakes is considering two different financing plans. Under plan I the interest would be 10% on $100,000 face value bonds, with 2,000 shares of common stock outstanding. Under plan II the interest would be $20,000. If the indifference point is $50,000 and the tax rate is 30%, how many shares of common stock are outstanding for plan II?

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