What is the beta of yerba stock after transaction

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Yerba Industries is an? all-equity firm whose stock has a beta of 1.10 and an expected return of 11 %. Suppose it issues new? risk-free debt with a 5.5 % yield and repurchase 60 % of its stock. Assume perfect capital markets.

a. What is the beta of Yerba stock after this? transaction?

b. What is the expected return of Yerba stock after this? transaction?

Suppose that prior to this? transaction, Yerba expected earnings per share this coming year of $ 3.00, with a forward? P/E 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.

d. What is? Yerba's forward? P/E ratio after this? transaction? Is this change in the? P/E ratio? reasonable? Explain.

Reference no: EM132382568

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