Green Manufacturing, Inc., plans to announce that it will issue$2.02 million of perpetual debt and use the proceeds to repurchasecommon stock. The bonds will sell at par with a coupon rate of 5percent. Green is currently an all-equity firm worth $6.66 millionwith 420,000 shares of common stock outstanding. After the sale ofthe bonds, Green will maintain the new capital structureindefinitely. Green currently generates annual pretax earnings of$1.52 million. This level of earnings is expected to remainconstant in perpetuity. Green is subject to a corporate tax rate of35 percent. A) What is the expected return on Green’s equity beforethe announcement of the debt issue? B) Construct Green’s marketvalue balance sheet before the announcement of the debt issue. Whatis the price per share of the firm’s equity? C) Construct Green’smarket value balance sheet immediately after the announcement ofthe debt issue. What is Green’s stock price per share immediatelyafter the repurchase announcement? D) How many shares will Greenpurchase as a result of the debt issue? How many shares of commonstock will remain after the repurchase? E) Construct a market valuebalance sheet after the restructuring. What is the required returnon Green’s equity after the restructuring?