Problem $16-5$ M and M and Stock Value $[$LO$1]$

Foundation, Incorporated, 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 $200,000$

shares of stock outstanding. Under Plan II$,$ there would be $150,000$ shares of stock

outstanding and $$2\mathrm{.}15$ million in debt outstanding. The interest rate on the debt is $5$

percent and there are no taxes.

a$.$ Use M&M Proposition I to find the price per share. $($Do not round Intermedlate

calculatlons and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$ What is the value of the firm under each of the two proposed plans? $($Do not round

Intermedlate calculations and round your answers to the nearest whole dollar

amount, e$.$g$.,32.)$