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Foundation, Incorporated, is comparing two different capital structures: an all - equity plan ( Plan I ) and a levered plan ( Plan II )
Foundation, Incorporated, is comparing two different capital structures: an allequity plan
Plan I and a levered plan Plan II Under Plan I, the company would have
shares of stock outstanding. Under Plan II there would be shares of stock
outstanding and $ million in debt outstanding. The interest rate on the debt is
percent and there are no taxes.
a Use M&M Proposition I to find the price per share. Do not round intermediate
calculations and round your answer to decimal places, eg
b What is the value of the firm under each of the two proposed plans? Do not round
intermediate calculations and round your answers to the nearest whole dollar
amount, eg
Answer is complete but not entirely correct.
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