What is the value of the firm-byrd corporation

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Byrd 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 365,000 shares of stock outstanding. Under Plan II, there would be 245,000 shares of stock outstanding and $4.56 million in debt outstanding. The interest rate on the debt is 10 percent and there are no taxes.

a. Use MM Proposition I to find the price per share.

b. What is the value of the firm under each of the two proposed plans (all equity and levered)?

Reference no: EM132646748

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