Macbeth Spot Removers is entirely equity financed with values as shown below:

Data
Number of shares		1,900
Price per share	$	19
Market value of shares	$	36,100

Although it expects to have an income of $2,400 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
Operating income ($)	1,400	1,900	2,400	2,900

Suppose that Macbeth Spot Removers issues only $4,180 of debt and uses the proceeds to repurchase 220 shares. The interest rate on the debt is 9%.

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.)

b. If the beta of Macbeth's assets is 0.98 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.)

Outcomes Operating income ($) Interest Equity earnings ($) Earnings per share ($) Return on shares (%) All-equity beta Debt beta D/E ratio Equity beta