Aestin corp is comparing two different capital structures, Ask an Expert

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Aestin Corp. is comparing two different capital structures. Plan I would result in 8,000 shares of stock and $80,000 in debt. Plan II would result in 6,000 shares of stock and $120,000 in debt. The interest rate on the debt is 6 percent. Assume that EBIT will be $50,000. An all-equity plan would result in 12,000 shares of stock outstanding. Ignore taxes.

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Question 1: What is the price per share of equity under Plan I? Plan II? Explain comprehensively and also provide formulas and calculations.

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Category:- Basic Finance
Reference No.:- M91147274

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