Zelnor, Inc., is an all-equity firm with 100 million shares outstanding currently trading for $8.50 per share.
Question:
a. If the new compensation plan has no effect on the value of Zelnor's assets, what will be the share price of the stock once this plan is implemented?
b. What is the cost of this plan for Zelnor's investors? Why is issuing equity costly in this case?
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a Assets 850m New shares 1...View the full answer
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