Problem:
Cooke Co. is comparing two different capital structures. Plan I would result in 10,000 shares of stock and $310,000 in debt. Plan II would result in 13,000 shares of stock and $217,000 in debt. The interest rate on the debt is 10 percent. The all-equity plan would result in 20,000 shares of stock outstanding. Ignore taxes for this problem
Required:
Question 1: What is the price per share of equity under Plan I?
Question 2: What is the price per share of equity under Plan II?
Note: Please explain comprehensively and give step by step solution.