e. Green will repurchase  shares as a result of the debt issue. There are   remaining shares after the repurchase.

     f. Construct the market value balance sheet after the restructuring. (Round your answers to the nearest dollar (e.g., 351))

    g. The required return on Green's equity after the restructuring is  percent.

    
     e. Green will repurchase ??? shares as a result of the debt issue. There are ???? remaining shares after the repurchase.

     f. Construct the market value balance sheet after the restructuring. (Round your answers to the nearest dollar (e.g., 351))

    g. The required return on Green's equity after the restructuring is ?? percent.

For this homework assignment, we present two ideal scenarios. Scenario #1: After graduation from high school, students begin jobs as construction workers and elementary school teachers. They expect their wages to remain relatively level throughout their careers. They marry five years after graduation from high school and raise large families with home schooling by the parents. Before marriage, both men and women work; once couples begin home schooling their children, one parent stays home, either the father or the mother. Scenario #2: After high school, students start pre-medical programs at college. They expect four years of college and four years of medical school, with costs of $40,000 a year. The students’ parents have no extra money, so the students borrow the tuition costs. After medical schools, they work for ten years as surgeons and medical specialists, then have one child that is sent to day care one year after birth and eventually to public school. Both parents work full time. In each scenario, what is the expected progression of income? For each career, what is the expected ratio of future income to current income (older construction worker vs young construction worker; surgeon vs college student). What is the likelihood of working with home schooled families vs one child in public school or day care? In each scenario, what is the expected progression of expenses? Consider current education costs and future costs of raising a family. In Scenario #1, why are expenses low before marriage and high after marriage? In Scenario #2, why are expenses high during college and medical school and low afterwards? In each scenario, do recent high school graduates save for future expenses or borrow from future income? Assume that all the students are good risks and we need not worry about defaults on loans. In which scenario is the real interest rate higher?

    
     e. Green will repurchase  shares as a result of the debt issue. There are  remaining shares after the repurchase.

     f. Construct the market value balance sheet after the restructuring. (Round your answers to the nearest dollar (e.g., 351))

    g. The required return on Green's equity after the restructuring is  percent.

    
     e. Green will repurchase  shares as a result of the debt issue. There are  remaining shares after the repurchase.

     f. Construct the market value balance sheet after the restructuring. (Round your answers to the nearest dollar (e.g., 351))

    g. The required return on Green's equity after the restructuring is  percent.

Green Manufacturing, Inc., plans to announce that it will issue $1 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a 4 percent annual coupon rate. Green is currently an all-equity firm worth $18 million with 700,000 shares of common stock outstanding. After the sale of the bonds, Green will maintain the new capital structure indefinitely. Green currently generates annual pretax earnings of $3 million. This level of earnings is expected to remain constant in perpetuity. Green is subject to a corporate tax rate of 33 percent. (Unless otherwise noted, round your answers to 2 decimal places. (e.g., 0.16)) a. The expected return on Green's market value of equity before the announcement of the debt issue is percent. b. Construct Green's market value balance sheet before the announcement of the debt issue. (Round your answers to the nearest dollar (e.g., 351)) Market Value Balance Sheet Debt $ Assets $ Equity $ Total assets $ Total D & E $ The price per share of the firm's equity is $ c. Construct Green's market value balance sheet immediately after the announcement of the debt issue. (Round your answers to the nearest dollar (e.g., 351)) Market Value Balance Sheet Old assets $ Debt $ PV(tax shield) $ Equity $ Total assets $ Total D & E $ d. Green's stock price per share immediately after the repurchase announcement is $ . e. Green will repurchase shares as a result of the debt issue. There are remaining shares after the repurchase. f. Construct the market value balance sheet after the restructuring. (Round your answers to the nearest dollar (e.g., 351)) Market Value Balance Sheet Old assets $ Debt $ PV(tax shield) $ Equity $ Total assets $ Total D & E $ g. The required return on Green's equity after the restructuring is percent.

    
     e. Green will repurchase  shares as a result of the debt issue. There are   remaining shares after the repurchase.

     f. Construct the market value balance sheet after the restructuring. (Round your answers to the nearest dollar (e.g., 351))

    g. The required return on Green's equity after the restructuring is  percent.

Green Manufacturing, Inc., plans to announce that it will issue $3 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a 4 percent annual coupon rate. Green is currently an all-equity firm worth $13 million with 800,000 shares of common stock outstanding. After the sale of the bonds, Green will maintain the new capital structure indefinitely. Green currently generates annual pretax earnings of $2 million. This level of earnings is expected to remain constant in perpetuity. Green is subject to a corporate tax rate of 40 percent. (Unless otherwise noted, round your answers to 2 decimal places. (e.g., 0.16)) a. The expected return on Green's market value of equity before the announcement of the debt issue is percent. b. Construct Green's market value balance sheet before the announcement of the debt issue. (Round your answers to the nearest dollar (e.g., 351)) Market Value Balance Sheet Debt $ Assets $ Equity $ Total assets $ Total D & E $ The price per share of the firm's equity is $ c. Construct Green's market value balance sheet immediately after the announcement of the debt issue. (Round your answers to the nearest dollar (e.g., 351)) Market Value Balance Sheet Old assets $ Debt $ PV(tax shield) $ Equity $ Total assets $ Total D & E $ d. Green's stock price per share immediately after the repurchase announcement is $ . e. Green will repurchase shares as a result of the debt issue. There are remaining shares after the repurchase. f. Construct the market value balance sheet after the restructuring. (Round your answers to the nearest dollar (e.g., 351)) Market Value Balance Sheet Old assets $ Debt $ PV(tax shield) $ Equity $ Total assets $ Total D & E $ g. The required return on Green's equity after the restructuring is percent.

Green Manufacturing, Inc., plans to announce that it will issue $7 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a 1 percent annual coupon rate. Green is currently an all-equity firm worth $11 million with 600,000 shares of common stock outstanding. After the sale of the bonds, Green will maintain the new capital structure indefinitely. Green currently generates annual pretax earnings of $4 million. This level of earnings is expected to remain constant in perpetuity. Green is subject to a corporate tax rate of 38 percent. (Unless otherwise noted, round your answers to 2 decimal places. (e.g., 0.16))

a. The expected return on Green's market value of equity before the announcement of the debt issue is percent.

b. Construct Green's market value balance sheet before the announcement of the debt issue. (Round your answers to the nearest dollar (e.g., 351)) Market Value Balance Sheet Debt $ Assets $ Equity $ Total assets $ Total D & E $ The price per share of the firm's equity is $

c. Construct Green's market value balance sheet immediately after the announcement of the debt issue. (Round your answers to the nearest dollar (e.g., 351)) Market Value Balance Sheet Old assets $ Debt $ PV(tax shield) $ Equity $ Total assets $ Total D & E $

d. Green's stock price per share immediately after the repurchase announcement is $ .

e. Green will repurchase shares as a result of the debt issue. There are remaining shares after the repurchase.

f. Construct the market value balance sheet after the restructuring. (Round your answers to the nearest dollar (e.g., 351)) Market Value Balance Sheet Old assets $ Debt $ PV(tax shield) $ Equity $ Total assets $ Total D & E $

g. The required return on Green's equity after the restructuring is percent.

    
     e. Green will repurchase  shares as a result of the debt issue. There are  remaining shares after the repurchase.

     f. Construct the market value balance sheet after the restructuring. (Round your answers to the nearest dollar (e.g., 351))

    g. The required return on Green's equity after the restructuring is  percent.