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

DataNumber of shares2,400Price per share$24Market value of shares$57,600

Although it expects to have an income of $2,900 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.

OutcomesOperating income ($)1,9002,4002,9003,400

Suppose that Macbeth Spot Removers issues only $6,240 of debt and uses the proceeds to repurchase 260 shares. The interest rate on the debt is 6%.

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 1.08 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.)