Question 3 (18 points) Green Capital Limited plans to announce that it will issue $2 billion of perpetual bond and use the proceeds to repurchase its common stock. The bond will sell at par with a coupon rate of 5%. Green Capital Limited is currently an all-equity firm worth $5.2 billion with 2 billion shares of common stock outstanding. After the bond issue, Green Capital Limited will maintain the new capital structure indefinitely. Green Capital Limited generates annual pre-tax earnings of $500 million, and is expected to remain constant in perpetuity. Green Capital Limited is subject to a corporate tax of 15%. 3a) What is the expected return on Green's equity before the announcement of the bond issue? (3 points) 3b) Construct Green's market value balance sheet before the announcement of the bond issue. What is the price per share of the firm's equity? (3 points) 3c) Construct Green's market value balance sheet immediately after the announcement of the bond issue. (3 points) 3d) What will be Green's stock price per share immediately after the repurchase announcement? (3 points) 3e) How many shares will Green repurchase as a result of the debt issue? (3 points) 31) How many shares of common stock will remain after the repurchase? (3 points)