Problem 13.07 – Comparing Capital Structures and Price per Share

Essentials of Corporate Finance

Ross, Westerfield, and Jordan

11th Edition

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Compare two different capital structures for a corporation. Plan I has a specific number of shares and a certain amount of debt, while Plan II has a different number of shares and a different amount of debt. The interest rate on the debt is constant. Calculate the price per share of equity under both Plan I and Plan II, assuming no taxes.

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