Risky Holdings Company (RHC) has $48M in debt and a debt to total assets ratio of 40%. RHC would like to issue equity and use the proceeds to pay down its debt to reduce its debt to total assets ratio to 5%, which would make its debt risk-free. The firms debt beta is 0.45 before the equity issuance. The expected return for equity holders before the restructuring was 13%, and there are 3M shares outstanding. Assume a frictionless M&M world, and a risk free rate of 3% and a market risk premium of 5%.

a. How many shares does RHC issue in the restructuring? What is the price per share before restructuring? What is the price per share after?

b. What is the debt beta after the restructuring?

c. What is the expected return on assets () before the transaction? After?

d. What is the expected return on equity after the transaction?