2. Yerba Industries is an all-equity firm whose stock has a beta of 1.2 and an expected return of 12.5%. Suppose it issues ne Assume perfect capital markets. (a) What is the beta of Yerba stock after this transaction? (b) What is the expected return of Yerba stock after this transaction? Suppose that prior to this transaction, Yerba w risk-free debt with a 5% yield and uses the proceeds to repurchase 40% of its stock. expected earnings per share this coming year of $1.50, with a orward PE ratio (that is, the share price divided by the expected earnings for the coming year) of 14. (c) What is Yerba's expected earnings per share after this transaction? Does this change b enefit shareholders? Explain. (d) What is Yerba's forward P/E ratio after this transaction? Is this change in the P/E ratio reasonable? Explain