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What is the value of the firm under plan

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Reference no: EM132040361

Kyle 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 780,000 shares of stock outstanding. Under Plan II, there would be 530,000 shares of stock outstanding and $10 million in debt outstanding. The interest rate on the debt is 10 percent, and there are no taxes.

1) Use M&M Proposition I to find the price per share of equity

2) What is the value of the firm under Plan I?

Reference no: EM132040361

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