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please show work Check my work Astromet is financed entirely by common stock and has a beta of 160. The firm pays no taxes. The
please show work
Check my work Astromet is financed entirely by common stock and has a beta of 160. The firm pays no taxes. The stock has a price-earnings multiple of 15.0 and is priced to offer a 12.0% expected return The company decides to repurchase half the common stock and substitute an equal value of debt. Assume that the debt yields a risk-free 3.6% Calculate the following Required: a. The beta of the common stock after the refinancing b. The required return and risk premium on the common stock before the refinancing c. The required return and risk premium on the common stock after the refinancing d. The required return on the debt e. The required return on the company (i e, stock and debt combined) after the refinancing If EBIT remains constant: f. What is the percentage increase in earnings per share after the refinancing? g-1. What is the new price earnings multiple? g-2. Has anything happened to the stock price? Complete this question by entering your answers in the tabs below. Reg A to E Reg F to G2 a. The beta of the common stock after the refinancing (Enter your answer rounded to 1 decimal place.) b. The required return and risk premium on the common stock before the refinancing (Enter your answer as a percent Check mi Req A to E Req F to G2 a. The beta of the common stock after the refinancing (Enter your answer rounded to 1 decimal place.) b. The required return and risk premium on the common stock before the refinancing (Enter your answer as a percent rounded to 1 decimal place.) C. The required return and risk premium on the common stock after the refinancing (Enter your answer as a percent rounded to 1 decimal place.) d. The required return on the debt (Enter your answer as a percent rounded to 1 decimal place.) e. The required return on the company (i.e., stock and debt combined) after the refinancing (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) Show less a. 32 % % Beta of the common stock b. Required return (before refinancing) Risk premium (before refinancing) Required return (after refinancing) Risk premium (after refinancing) d. Required return e. Required return C. % % % % Req Fto G2 > Req A to E Req Fto G2 f. If EBIT remains constant. What is the percentage increase in earnings per share after the refinancing? (Do not round intermediate calculations. Enter your answer as a whole percent.) 9-1. If EBIT remains constant. What is the new price-earnings multiple? (Do not round intermediate calculations. Round your answer to 2 decimal places.) g-2. Has anything happened to the stock price? Show less f. % Increase in earnings per share g-1. New price-earnings multiple g-2. Has anything happened to the stock price?Step by Step Solution
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