Particulate plc is an all-equity financed business with a market value of £35m and a cost of capital (after tax) of 20 per cent p.a.

The business intends to purchase and cancel £8m of equity finance using the cash raised from issuing a 10 per cent irredeemable loan stock. The rate of corporation tax is 30 per cent.
Assuming that the assumptions of Modigliani and Miller (in a world with taxes) are correct, how will the capital restructuring affect:

(a) the market value of Particulate plc;

(b) its cost of equity; and

(c) its weighted average cost of capital?