A group of graduate students has decided to form a small Internet Service Comp

A group of graduate students has decided to form a small Internet Service Company in Brevard County. The company will service Brevard
County home users and need $300 million to start the company. Two financing plans have been proposed by the investment banking firms. Plan A is an all
common- equity alternative. Under this agreement 3million common shares will be sold to net the firm $100 per share. Plan B involves the use of financial
leverage (debt and equity). A debt issue with a 20-year maturity period will

be privately placed. The debt issue will carry an interest rate of 10 percent and the principal borrowed will amount to $120 million. The
corporate tax rate is 35 percent. If the detailed financial analysis projects that there is a 30% chance that EBIT will be $14.0 million 40% chance that
it will be $16.0 million and 30% chance that it will be $18 million annually which plan will maximize the wealth of the stockholders? (note: the problem
is based on the understanding of financial statement and financial leverage)please show work