Macbeth Spot Removers is entirely equity financed. Use the following information.

Data
Number of shares	2,600
Price per share	$42
Market value of shares	$109,200
Expected operating income	$16,380
Return on assets	15%

Macbeth now decides to issue $54,600 of debt and to use the proceeds to repurchase stock. Suppose that Ms. Macbeth's investment bankers have informed her that since the new issue of debt is risky, debtholders will demand a return of 10.9%, which is 3.1% above the risk-free interest rate.

a. What are r_A and r_E after the debt issue? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Return on assets	%
Return on equity	%

b. Suppose that the beta of the unlevered stock was .60. What will _A, _E, and _D be after the change to the capital structure? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Asset beta
Debt beta
Equity beta