Warsaw Manufacturing, Incorporated, plans to announce that it will issue $1.9 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of 5 percent. The company is currently all-equity and worth $6.7 million with 290,000 shares of common stock outstanding. After the sale of the bonds, the company will maintain the new capital structure indefinitely. The annual pretax earnings of $1.32 million are expected to remain constant in perpetuity. The tax rate is 21 percent.