Comparing two different capital structures

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Reference no: EM132037026

Rise Against 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 210,000 shares of stock outstanding. Under Plan II, there would be 150,000 shares of stock outstanding and $2.28 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes.

Use M&M Proposition I to find the price per share.

Share price $ per share

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

All equity plan $

Levered plan $

Reference no: EM132037026

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