Question
Rise Against Corporation is comparing two different capital structures: an all equity plan (Plan A) and a levered plan (Plan B). Under Plan A, the
Rise Against Corporation is comparing two different capital structures: an all equity plan (Plan A) and a levered plan (Plan B). Under Plan A, the company would have 210,000 shares of stock outstanding. Under Plan B, there would be 150,000 shares of stock outstanding and $2.28 million in debt outstanding. The interest rate on the debt is 8%, and there are no taxes.
A. What is the break-even EBIT?
B. What is the price per share of equity?
C. What is the value of the firm?
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Finance Directors Handbook
Authors: Glynis D Morris, Sonia McKay, Andrea Oates
5th Edition
1566768691, 978-1566768696
