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Coldstream Corp. is comparing two different capital structures. Plan I would result in 16,000 shares of stock and $100,000 in debt. Plan II would result
Coldstream Corp. is comparing two different capital structures. Plan I would result in 16,000 shares of stock and $100,000 in debt. Plan II would result in 13,000 shares of stock and $150,000 in debt. The interest rate on the debt is 6 percent. Assume that EBIT will be $90,000. An all-equity plan would result in 22,000 shares of stock outstanding. Ignore taxes. What is the price per share of equity under Plan I? Plan II?
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