Peanut (PNT)'s common stock is worth $450 million and its debt is worth $261 million. Equity investors expect a 18% return (Re), and debt holders expect a 7% return (Rd). We are in an M&M perfect capital markets world. a. Suppose PNT issues $261 million of new stock to buy back the debt. What is Re after they complete this leverage-changing transaction? b. Someone suggests that instead PNT should issue $83.99 million of new debt, using it to buy back stock. i. If the risk of the debt does not change, what is the expected return of the stock after this transaction? ii. If the risk of the debt increases, would the expected return of the stock be higher or lower than when debt is issued to repurchase stock in part (i)?