Rolston corporation is comparing two different capital, Ask an Expert

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Rolston Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Rolston would have 155,000 shares of stock outstanding. Under Plan II, there would be 105,000 shares of stock outstanding and $1.33 million in debt outstanding. The interest rate on the debt is 6 percent and there are no taxes.

Use MM Proposition I to find the price per share. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16). Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)

Share price $ per share

What is the value of the firm under each of the two proposed plans?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92392099

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