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Dickson Corporation is comparing two different capital structures. Plan I would result in 29,000 shares of stock and $90,000 in debt. Plan II would result
Dickson Corporation is comparing two different capital structures. Plan I would result in 29,000 shares of stock and $90,000 in debt. Plan II would result in 23,000 shares of stock and $270,000 in debt. The interest rate on the debt is 5 percent. Assume that EBIT will be $110,000. An all-equity plan would result in 32,000 shares of stock outstanding. Ignore taxes. What is the price per share of equity under Plan I? Plan II?
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