Gulf Shores Inn is comparing two separate capital structures. The first structure consists of 310,000 shares...
Gulf Shores Inn is comparing two separate capital structures. The
first structure consists of 310,000 shares of stock and no debt.
The second structure consists of 264,000 shares of stock and $1.86
million of debt. What is the price per share of equity?
Homework Answers
Price per Share of Equity = Amount of Debt/(Difference in number of shares in both capital structures)
Price per Share = 1,860,000/(310,000 - 264,000)
Price per Share = $40.43
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