Astromet is financed entirely by common stock and has a beta of 2.00. The firm pays no taxes. The stock has a price-earnings multiple of 11.0 and is priced to offer a 10.1% 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 4.8%. Calculate the following:

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?