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The CCG construction company is entirely financed by its own funds. A financial institution has just granted it a $500,000 debt at an interest rate

The CCG construction company is entirely financed by its own funds. A financial institution has just granted it a $500,000 debt at an interest rate of 4%. The purpose of the debt is to buy back 25,000 shares of the company's outstanding stock (out of a total of 80,000 shares).  

a) Assuming no taxes, calculate the value of CCG after the share buyback.

b) The firm earns a 14% return on assets. If there are no taxes, what will be the required rate of return on equity for CCG?

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