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vovikov84 [41]
3 years ago
7

Honeycutt Co. is comparing two different capital structures. Plan I would result in 12,700 shares of stock and $109,250 in debt.

Plan II would result in 9,800 shares of stock and $247,000 in debt. The interest rate on the debt is 10 percent. The all-equity plan would result in 15,000 shares of stock outstanding. Ignore taxes for this problem.a. What is the price per share of equity under Plan I? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)b. What is the price per share of equity under Plan II? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
Ulleksa [173]3 years ago
5 0

Answer:

Check the following calculations

Explanation:

All-Equity Plan:

Number of shares = 15,000

Plan I:

Number of shares = 12,700

Value of debt = $109,250

Price per share = Value of debt / (Number of shares under All-Equity Plan - Number of shares under Plan I)

Price per share = $109,250 / (15,000 - 12,700)

Price per share = $109,250 / 2,300

Price per share = $47.50

Plan II:

Number of shares = 9,800

Value of debt = $247,000

Price per share = Value of debt / (Number of shares under All-Equity Plan - Number of shares under Plan II)

Price per share = $247,000 / (15,000 - 9,800)

Price per share = $247,000 / 5,200

Price per share = $47.50

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Improving quality seems to be a strategic weapon in gaining market share. However, improving quality entails allocation of resou
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A. prevention costs

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6 0
1 year ago
Olivia is willing to pay $185 a month for four years for a car payment. if the interest rate is 4.9 percent, compounded monthly,
Grace [21]
Let x = the price of the car that Olivia can afford.

Down payment = $2,500
Remaining amount to be financed is P = x - 2500.

Total payments should equal the monthly payments.
The total payment over 4 years (48 months) is
A  = $185*48 = $8,880

The rate is r = 4.9% = 0.049.
The compounding interval is n = 12.
The time is t = 4  years.
The amount financed is P = $(x - 2500).
Therefore
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1.216(x - 2500) = 8880
x - 2500 = 7302.63
x = 9802.63
Olivia can afford a car priced at $9,802.63.

Answer: $9,802.63

4 0
2 years ago
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