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

Cooke Co. is comparing two different capital structures. Plan I would result in 9,000 shares of stock and $342,000 in debt. Plan II would result in 12,600 shares of stock and $205,200 in debt. The interest rate on the debt is 10 percent. The all-equity plan would result in 18,000 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

$