Edison Electric has $1 billion market capitalization, 10 million shares trading at $100/share. Currently, its equity beta is 1.8. It also has $0.5 billion (market value) of debt outstanding with a yield-to-maturity of 7%. The Treasury bill rate is 5% and the market risk premium is estimated at 8%. Edisons tax rate is 34%. Assume everything else in the perfect markets hold throughout your analysis, and that CAPM determines the risk-return relationship for all assets: business projects, stock, bonds, etc.

Suppose Edison announces that it is issuing $1 billion of new debt at 9% in order to retire the entire $0.5 billion of old debt (they will pay $0.5 billion for it) and to repurchase $0.5 billion of outstanding stock at market prices.

Question 3 2 pts After the capital structure change, the total market value of Edison's remaining shares is $_billions (provide your answer below to fill the blank) Question 4 4 pts After the capital structure change, the new stock price is $ __ per share (provide your answer below to fill the blank)