Homework: Ch 17B, Does Debt Policy Matter?, 325 Save IM Score: 0 of 3 pts 7 of 8 (6 complete) HW Score: 66.15%, 8.6 of 13 pts P14-14 (similar to) Question Help * Global Pistons (GP) has common stock with a market value of $350 million and debt with a value of $221 million. Investors expect a 16% return on the stock and a 4% return on the debt. Assume perfect capital markets. a. Suppose GP issues $221 million of new stock to buy back the debt. What is the expected return of the stock after this transaction? Fal b. Suppose instead GP issues $79.17 million of new debt to repurchase stock 1. If the risk of the debt does not change, what is the expected return of the stock after this transaction? it. If the risk of the debt increases, would the expected return of the stock be higher or lower than when debt is issued to repurchase stock in part (1)? a. Suppose GP issues $221 million of new stock to buy back the debt. What is the expected return of the stock after this transaction? if GP issues $221 million of new stock to buy back the debt, the expected return is % (Round to two decimal places) S RE Ba PL Enter your answer in the answer box and then click Check Answer Check Answer Clear All parts