Astromet is financed entirely by common stock and has a beta of 1.40. The firm pays no taxes. The stock has a price-earnings multiple of 13.0 and is priced to offer a 10.7% expected return. The company decides to repurchase half the common stock and substitute an equal value of debt. Assume that the debt yields a risk-free 5.0%. Calculate the following:

I already have the answers for A through E. I only need help with F, G-1 & G-2

If EBIT remains constant:

f. What is the percentage increase in earnings per share after the refinancing?

g-1. What is the new price-earnings multiple?

g-2. Has anything happened to the stock price?

2.8 10.7% 5.7 % a. Beta of the common stock b. Required return (before refinancing) Risk premium (before refinancing) c. Required return (after refinancing) Risk premium (after refinancing) d. Required return e. Required return 16.4% 11.4 % 5.01% 10.7%