X P14-21 (similar to) Question Help Yerba Industries is an all-equity firm whose stock has a bota of 0.60 and an expected return of 19,6%. Suppose it issues new risk-free debt with a 6% yield and repurchase 55% of its stock. Assume perfect capital markets a. What is the beta of Yerba stock after this transaction? b. What is the expected retum of Yerba stock after this transaction? Suppose that prior to this transaction, Yerba expected earnings per share this coming year of $1.50, with a forward PE ratio (that is, the share price divided by the expected earnings for the coming year) of 13. c. What is Yerba's expected earnings per share after this transaction? Does this change benefit the shareholder? Explain. (5 d. What is Yerba's forward PlE ratio after this transaction? Is this change in the P/E ratio reasonable? Explain