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WinTech Technology Inc. is evaluating two financing options for its new investment of $2,500,000 Option 1: 0% debt Option 2: 60% debt Regardless of how

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WinTech Technology Inc. is evaluating two financing options for its new investment of $2,500,000 Option 1: 0% debt Option 2: 60% debt Regardless of how the firm is financed, expected sales and costs are as follows: Sales (units) 22,500 units Sale price per unit $100.00 Variable cost per unit $ 35.00 Fixed cost $1,000,000 Additional information regarding each option of financing is shown below: Option1 Option 2 0% Debt 60% Debt New shares issued at $10 per share 250,000 100,000 Debt, $0 $1,500,000 Equity, $ $2,500,000 $1,000,000 Interest rate NA 10.00% Tax rate 35% 35% Required return from equity, Ks 9.25% 14.5% b) Calculate the estimated share price under each financing option using the zero-growth model. (4 marks) Which financing option should be chosen? Explain. (1 mark) c) ITotal. 15 martel

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