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Trapper 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 165,000 shares of stock outstanding. Under Plan II, there would be 115,000 shares of stock outstanding and $1.43 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes. a. Use M&M Proposition I to find the price per share. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. What is the value of the firm under each of the two proposed plans
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Consider a borrower that is approved for a standard 10-year, fully amortizing house mortgage with an original balance of $500,000 and a note rate
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Three different companies each purchased a machine on January 1, 2014, for $95,000. Each machine was expected to last five years or 300,000 hours.
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