James Corporation is comparing two different capital structures an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I the company would have
160500 shares of stock outstanding. Under Plan II there would be 64200 shares of stock outstanding and $1.498 million in debt outstanding. The interest rate
on the debt is 10 percent and there are no taxes.
Using M&M Proposition I the price per share of equity under each of the two proposed plans is $_______ . The value of the firm is $______ under Plan I
and $_____ under Plan II
Please Show how you find your answers