Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Kyle would have 780,000 shares of stock outstanding. Under Plan II, there would be 530,000 shares of stock outstanding and $10 million in debt outstanding. The interest rate on the debt is 10 percent, and there are no taxes.

1. Use M&M Proposition I to find the price per share of equity.

Share price________

2. What is the value of the firm under Plan I?

Value of the firm________

3. What is the value of the firm under Plan II?

Value of the firm_________