assume no taxes. Outcomes Operating income ($) 1,300 1,800 2,300 2,800 Suppose that Macbeth Spot Removers...

Transcribed Image Text:

assume no taxes. Outcomes Operating income ($) 1,300 1,800 2,300 2,800 Suppose that Macbeth Spot Removers issues only $3,780 of debt and uses the proceeds to repurchase 210 shares. The interest rate on the debt is 10%. a. Calculate the equity earnings, earnings per share, and return on shares for each operating income assumption. (Input all values as a positive number. Round your "Earnings per share" answers to 2 decimal places. Enter your "Return on shares" answers as a percent rounded to 2 decimal places. Round the other answers to the nearest whole number.) Outcomes Operating income ($) Interest 1,300 1,800 2,300 2,800 378 378 378 Equity earnings ($) 922 1,422 1,922 Earnings per share ($) 0.58+/-0.01 0.89 0.01 Return on shares (%) 3.22--0,01 4.97+-0.01 1.21-001 6.72-0.01 378 2,422 1.52-0.01 8.46-2001 b. If the beta of Macbeth's assets is 0.96 and its debt is risk-free, what would be the beta of the equity after the debt issue? (Round your answers to 2 decimal places.) assume no taxes. Outcomes Operating income ($) 1,300 1,800 2,300 2,800 Suppose that Macbeth Spot Removers issues only $3,780 of debt and uses the proceeds to repurchase 210 shares. The interest rate on the debt is 10%. a. Calculate the equity earnings, earnings per share, and return on shares for each operating income assumption. (Input all values as a positive number. Round your "Earnings per share" answers to 2 decimal places. Enter your "Return on shares" answers as a percent rounded to 2 decimal places. Round the other answers to the nearest whole number.) Outcomes Operating income ($) Interest 1,300 1,800 2,300 2,800 378 378 378 Equity earnings ($) 922 1,422 1,922 Earnings per share ($) 0.58+/-0.01 0.89 0.01 Return on shares (%) 3.22--0,01 4.97+-0.01 1.21-001 6.72-0.01 378 2,422 1.52-0.01 8.46-2001 b. If the beta of Macbeth's assets is 0.96 and its debt is risk-free, what would be the beta of the equity after the debt issue? (Round your answers to 2 decimal places.)