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Q1. Macbeth Spot Removers is entirely equity financed with values as shown below:

\fYou can see attach file for the full queston. Please show all working. Macbeth Spot Removers is entirely equity financed with values as shown below: Data Number of shares 1,700 Price per share Market value of shares $ $ 17 28,900 Although it expects to have an income of $2,200 a year in perpetuity, this income is not certain. This table shows the return to stockholders under different assumptions about operating income. We assume no taxes. Operating income ($) 1,200 Outcomes 1,700 2,200 2,700 Suppose that Macbeth Spot Removers issues only $3,400 of debt and uses the proceeds to repurchase 200 shares. The interest rate on the debt is 9%. a. Calculate the equity earnings, earnings per share, and return on shares for each operating income assumption. (Input all values as a positive number. Round your "Earnings per share" answers to 2 decimal places. Enter your "Return on shares" answers as a percent rounded to 2 decimal places. Round the other answers to the nearest whole number.) Outcomes Operating income ($) Interest Equity earnings ($) Earnings per share ($) Return on shares (%) b. If the beta of Macbeth's assets is .94 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.) All-equity beta Debt beta D/E ratio Equity beta Q2. Gaucho Services starts life with all-equity financing and a cost of equity of 15%. Suppose it refinances to the following market-value capital structure: Debt (D) Equity (E) 43% 57% at rD = 8.8% Use MM's proposition 2 to calculate the new cost of equity. Gaucho pays taxes at a marginal rate of Tc = 35%. Calculate Gaucho's after-tax weighted-average cost of capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)