題組內容

2.Astromet is financed entirely by common stock and has a beta of 1.0. The firm pays no taxes. The stock has a price-caring multiple of 10 and is priced to offer a 10% expected return. The company decides to repurchase half the common stock and substitute an equal value of debt. Assume that the debt yields a risk-free 5%. Calculate the following:

b. The required return and risk premiun on the common stock after the refinancing (6 points)