Modigliani & Miller Propositions You operate an all$-$equity financed

company in perfect markets and generate earnings before interest and tax of

$$450,000.$ Your firm has just sold $$1\mathrm{.}7$ million worth of $4\mathrm{.}5\%$ coupon rate

bonds and plans to use the proceeds to buy back outstanding shares of

stock. Your firm's industry requires a $9\mathrm{.}75\%$ ROA.

a$.$ Calculate the market price and required return for your firm's stock just

prior to the repurchase.

b$.$ Calculate the market price and required return for your firm's stock just

after the repurchase?