1. General Corporation has 100 million outstanding shares with a share price of $5, and it has outstanding debt with a market value of $300 million. Investors expect a 6% return on debt and 12% return on stock. With the consideration of Modigliani and Miller (MM) Position II without tax,
   1. if General Corporation issues new shares of $300 million to redeem all outstanding debt, what is the revised expected return of the stock? (6 marks)

if General Corporation issues $100 million of new debts to repurchase 20 million of the stock, what is the revised expected return of the stock?