Data Number of shares Price per share Market value of shares 1,000 $ 10 $ 10,000 Although it expects to have an income of $1,500 a year in perpetuity, this income is not certain. This table shows the return to stockholders under different assumptions about operating income. We assume no taxes. Outcomes 1,000 1,500 Operating income ($) 500 2,000 Suppose that Macbeth Spot Removers issues only $2,500 of debt and uses the proceeds to repurchase 250 shares. The interest rate on the debt is 10%. a. Calculate the equity earnings, earnings per share, and return on shares for each operating income assumption. (Input all values as a positive number. Round your "Earnings per share" answers to 2 decimal places. Enter your "Return on shares" answers as a percent rounded to 2 decimal places. Round the other answers to the nearest whole number.) 500 2,000 Operating income (5) Interest Equity earnings (S) Earnings per share ($) Return on shares (%) Outcomes 1,000 250 750 250 250 1,500 250 1,250 250 1,750 b. If the beta of Macbeth's assets is 0.8 and its debt is risk-free, what would be the beta of the equity after the debt issue? (Round your answers to 2 decimal places.) 0.80 All-equity beta Debt beta 0.00 D/E ratio Equity beta Data Number of shares Price per share Market value of shares 1,000 $ 10 $ 10,000 Although it expects to have an income of $1,500 a year in perpetuity, this income is not certain. This table shows the return to stockholders under different assumptions about operating income. We assume no taxes. Outcomes 1,000 1,500 Operating income ($) 500 2,000 Suppose that Macbeth Spot Removers issues only $2,500 of debt and uses the proceeds to repurchase 250 shares. The interest rate on the debt is 10%. a. Calculate the equity earnings, earnings per share, and return on shares for each operating income assumption. (Input all values as a positive number. Round your "Earnings per share" answers to 2 decimal places. Enter your "Return on shares" answers as a percent rounded to 2 decimal places. Round the other answers to the nearest whole number.) 500 2,000 Operating income (5) Interest Equity earnings (S) Earnings per share ($) Return on shares (%) Outcomes 1,000 250 750 250 250 1,500 250 1,250 250 1,750 b. If the beta of Macbeth's assets is 0.8 and its debt is risk-free, what would be the beta of the equity after the debt issue? (Round your answers to 2 decimal places.) 0.80 All-equity beta Debt beta 0.00 D/E ratio Equity beta