What would be its new stock price per share

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Question - The Simon Company {SIMON} currently has $300,000 market value [and book value} of perpetual debt outstanding carrying a coupon rate of 6%. Its earnings before interest and taxes (EBITJ are $150,000, and it is a zero growth company. SIMON's current cost of equity is 8.8%, and its tax rate is 40%. The firm has 10,000 shares of common stock outstanding selling at a price per share of $90.00. Now assume that SIMON is considering changing from its original capital structure to a new capital structure with 50% debt and 50% equity. If it makes this change, its resulting market value would be $1,230,000. What would be its new stock price per share?

Reference no: EM133132348

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