14 10points eBook Print References Overnight Publishing Company (OPC) has $4.0 million in excess cash. The firm plans touse this cash either to retire all of its outstanding debt or to repurchase equity. The firm'sdebt is held by one institution that is willing to sell it back to OPC for $4.0 million. Theinstitution will not charge OPC any transaction costs. Once OPC becomes an all-equityfirm, it will remain unlevered forever. lf OPC does not retire the debt, the company wiluse the $4.0 million in cash to buy back some of its stock on the open marketRepurchasing stock also has no transaction costs. The company will generate$1,450,000 of annual earnings before interest and taxes in perpetuity regardless of itscapital structure. The firm immediatelv pavs out all earninas as dividends at the end ofeach year OPC is subject to a corporate tax rate of 25 percent and the required rate ofreturn on the firm's unlevered equity is 14 percent. The personal tax rate on interestincome is 30 percent and there are no taxes on equity distributions. Assume there areno bankruptcy costs. a. What is the value of opC if it chooses to retire all of its debt and become anunlevered firm? (Do not round intermediate calculations and enter your answer indollars, not millions of dollars, rounded to the nearest whole number, e.g.1,234,567) b. What is the value of OPC if it decides to repurchase stock instead of retiring its debt?(Hint Use the equation for the value of a levered firm with personal tax on interestincome from Problem 9 in the textbook.) (Do not round intermediate calculationsand enter your answer in dollars, not millions of dollars, rounded to the nearestwhole number, e.g., 1,234,567.)c.What is the value of OPC if the expected bankruptcy costs have a present value of$850,000? (Do not round intermediate calculations and enter your answers indollars, not millions of dollars, rounded to the nearest whole number, e.g..1,234,567)