An all equity firm is expected to have earnings per share in perpetuity of $6.00.The current price is $50.00 per share, which implies the equity capitalization rate (r_E)is 12 percent.Suppose the firm issues debt and uses the proceeds to buy back stock so that expected earnings per share increase to $8.00 in perpetuity.Assuming a world where Modigliani-Miller Proposition I holds, what is (a) thenew share priceand (b) thenew equity capitalization rate(r_E)?

The new share price is __________

The new equity capitalization rate is _________