P14-21 (similar to) Question Help Yerba Industries is an all-equity firm whose stock has a beta of 0.70 and an expected return of 9%. Suppose it issues new risk-free debt with a 4% yield and repurchase 25% of its stock Assume perfect capital markets a. What is the beta of Yerba stock after this transaction? b. What is the expected return of Yerba stock after this transaction? Suppose that prior to this transaction Yerba expected earnings per share this coming year of $6.00, with a forward P/E ratio (that is, the share price divided by the expected earings for the coming year of 14 c. What is Yerba's expected earnings per share after this transaction? Does this change benefit the shareholder? Explain. d. What is Yerba's forward P/E ratio after this transaction? Is this change in the P/E ratio reasonable? Explain a. What is the beta of Yerba stock after this transaction? The beta of Yerba stock after this transaction is (Round to two decimal places) Enter your answer in the answer box and then click Check Answer Check Answer Clear All 5 parts a remaining apitalization of billion but 132 Type here to search In mid-2015 Cualcomm in hac 511 billion in dobila 0 Address P14-21 (similar to) Question Help Yerba Industries is an all-equity firm whose stock has a beta of 0.70 and an expected return of 9%. Suppose it issues new risk-free debt with a 4% yield and repurchase 25% of its stock. Assume perfect capital markets a. What is the beta of Yerba stock after this transaction? b. What is the expected return of Yerba stock after this transaction? Suppose that prior to this transaction, Yerba expected earnings per share this coming year of $5.00, with a forward PE ratio (that is the share price divided by the expected earnings for the coming year) of 14 c. What is Yerba's expected earnings per share after this transaction? Does this change benefit the shareholder? Explain d. What is Yerba's forward P/E ratio after this transaction? Is this change in the P/E ratio reasonable? Explain a. What is the beta of Yerba stock after this transaction? The beta of Yerba stock after this transaction is W. (Round to two decimal places.) Aneur