Problem 13-7 Leverage and Stock Value [LO 1]

Cooke Co. is comparing two different capital structures. Plan I would result in 8,000 shares of stock and $432,000 in debt. Plan II would result in 13,500 shares of stock and $234,000 in debt. The interest rate on the debt is 9 percent. The all-equity plan would result in 20,000 shares of stock outstanding. Ignore taxes for this problem.

Required:

(a)	What is the price per share of equity under Plan I?

Price per share

$

(b)	What is the price per share of equity under Plan II?

Price per share

$