Question: Problem 1 4 - 5 MM and Stock Value Kuchar Corporation is comparing two different capital structures, an all - equity plan ( Plan I

Problem 14-5 MM and Stock Value
Kuchar Corporation 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 160,000 shares of
stock outstanding. Under Plan II, there would be 110,000 shares of stock outstanding and
$1.41 million in debt outstanding. The interest rate on the debt is 7 percent and there are
no taxes.
a. Use MM Proposition I to find the price per share. (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? (Do not round
intermediate calculations. Enter your answers in dollars, not millions of dollars,
rounded to the nearest whole number, e.g.,1,234,567.)
Problem 14-5 MM and Stock Value Kuchar Corporation is comparing two

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