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ABC Corporation is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan(Plan II). Under Plan I, ABC would have 250,000

ABC Corporation is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan(Plan II). Under Plan I, ABC would have 250,000 shares of stock outstanding. Under Plan II, there would be90,000shares of stock outstanding and $1.5 million in debt outstanding. The interest rate on the debt is 8percent, and there are no taxes.

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