In Problem 13, use MM Proposition I to find the share price under each of the two proposed plans. What is the value of the firm?

Problem 13,

Hammerson plc is comparing two different capital structures: an all equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Hammerson would have 712 million shares of equity outstanding. Under Plan II, there would be 475 million shares of equity outstanding and £1 billion in debt outstanding. The interest rate on the debt is 5 per cent and there are no taxes.