A company is planning to repurchase part of its common stock by issuing corporate debt. As a result, the firms debt-equity ratio is expected to rise from 35% to 50%. The firm currently has $3.1 million worth of debt outstanding. The cost of this debt is 6.7% per year. The firm expects to have an EBIT of $1.075 million per year in perpetuity and pays no taxes. (Please keep two digits after the decimal point e.g. 9.05 or 10.20)

What is the expected return on the firms equity before the stock repurchase plan?

What is the expected return on the firms equity after the stock repurchase plan?