Suppose that Macbeth Spot Removers issues only $2,500 of debt and uses the proceeds to repurchase 250 shares.
a. Rework Table to show how earnings per share and share return now vary with operating income.
b. If the beta of Macbeth€™s assets is .8 and its debt is risk-free, what would be the beta of the equity after the debtissue?

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TABLE Data Number of shares Price per share Market value of shares Market value of debt Interest at 10% 500 S10 $5,000 $5,000 $500 Outcomes Operating income (S) Interest (S) Equity earnings (S) Earnings per share (S) Return on shares (%) 500 1,000 500 500 0 500 1,500 2,000 500 1,000 1,500 500 10 20 30 Expected outcome