Western shores is comparing two separate capital structures. the first structure consists of 260,000 shares of stock and no debt. the second structure consists of 210,000 shares of stock and $1.5 million of debt. what is the price per share of equity

equality

Let the price per share of the equity be $ X

Capital structure 1 -

All equity financed, = 260,000 shares * $ X

Capital structure 2 -

Equity + Debt financed = 210,000 shares * $ X + $ 1,500,000

Since, there is a need to compare the two capital structures, thus -

Capital structure 1 = Capital structure 2

260,000 shares * $ X = 210,000 shares * $ X + $ 1,500,000

50,000 X = $ 1,500,000

X = $ 30

Thus, the price of equity = $ 30 per share