Green Manufacturing, Inc., plans to announce that it will issue $7 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a 2 percent annual coupon rate. Green is currently an all-equity firm worth $13 million with 700,000 shares of common stock outstanding. After the sale of the bonds, Green will maintain the new capital structure indefinitely. Green currently generates annual pretax earnings of $5 million. This level of earnings is expected to remain constant in perpetuity. Green is subject to a corporate tax rate of 48 percent. (Unless otherwise noted, round your answers to 2 decimal places. (e.g., 0.16))

a. The expected return on Green's market value of equity before the announcement of the debt issue is percent.

b. Construct Green's market value balance sheet before the announcement of the debt issue. (Round your answers to the nearest dollar (e.g., 351))

Market Value Balance Sheet
		Debt	$
Assets	$	Equity	$
Total assets	$	Total D & E	$

The price per share of the firm's equity is $

c. Construct Green's market value balance sheet immediately after the announcement of the debt issue. (Round your answers to the nearest dollar (e.g., 351))

Market Value Balance Sheet
Old assets	$	Debt	$
PV(tax shield)	$	Equity	$
Total assets	$	Total D & E	$

d. Green's stock price per share immediately after the repurchase announcement is $ .

e. Green will repurchase shares as a result of the debt issue. There are remaining shares after the repurchase. f. Construct the market value balance sheet after the restructuring. (Round your answers to the nearest dollar (e.g., 351))

Market Value Balance Sheet
Old assets	$	Debt	$
PV(tax shield)	$	Equity	$
Total assets	$	Total D & E	$

g. The required return on Green's equity after the restructuring is percent.