Value of the firm under each of the two proposed plans

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Franklin 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 150,000 shares of stock outstanding. Under Plan II, there would be 100,000 shares of stock outstanding and $1.24 million in debt outstanding. The interest rate on the debt is 5 percent and there are no taxes. Use MM 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.)

Share price $

What is the value of the firm under each of the two proposed plans? (Enter your answers in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)

All equity plan $

Levered plan $

Reference no: EM131346792

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