$6.$ As Twitter's new CEO, Elon Musk is considering whether he can increase the value of the firm by using a greater proportion of debt. Suppose Musk assumes that Twitter will generate an EBIT of $\backslash (\backslash$$ $10\backslash )$ million in perpetuity regardless of its capital structure. The company currently has a market value of debt of $\backslash (\backslash$$ $50\backslash )$ million and a market value of equity of $\backslash (\backslash$$ $50\backslash )$ million, but he is considering issuing $\backslash (\backslash$$ $25\backslash )$ million in additional debt to repurchase equity.

Assuming no taxes and a $\backslash (10\backslash \%\backslash )$ cost of debt, the cash flow to assets from the original case of $\backslash (\backslash$$ $50\backslash )$ million in debt and $\backslash (\backslash$$ $50\backslash )$ million in equity will be while the cash flow to shareholders will be and the cash flow to bondholders will be

In the case of the proposed debt restructuring $($assume no taxes and a $10\backslash \%$ cost of debt$),$ the cash flow to assets when the company has $\backslash (\backslash$$ $75\backslash )$ million in debt and $\backslash (\backslash$$ $25\backslash )$ million in equity will be while the cash flow to shareholders will be and the cash flow to bondholders will be $.$ In the case with no taxes or bankruptcy costs, capital structure is to a firm's overall value.

$($a$)\backslash (\backslash$$ $10\backslash )$ million; $\backslash (\backslash$$ $5\backslash )$ million; $\backslash (\backslash$$ $5\backslash )$ million; $\backslash (\backslash$$ $10\backslash )$ million; $\backslash (\backslash$$ $2\mathrm{.}5\backslash )$ million; $\backslash (\backslash$$ $7\mathrm{.}5\backslash )$ million; relevant

$($b$)\backslash (\backslash$$ $10\backslash )$ million; $\backslash (\backslash$$ $5\backslash )$ million; $\backslash (\backslash$$ $5\backslash )$ million; $\backslash (\backslash$$ $10\backslash )$ million; $\backslash (\backslash$$ $2\mathrm{.}5\backslash )$ million; $\backslash (\backslash$$ $7\mathrm{.}5\backslash )$ million; irrelevant

$($c$)\backslash (\backslash$$ $10\backslash )$ million; $\backslash (\backslash$$ $5\backslash )$ million; $\backslash (\backslash$$ $5\backslash )$ million; $\backslash (\backslash$$ $10\backslash )$ million; $\backslash (\backslash$$ $7\mathrm{.}5\backslash )$ million; $\backslash (\backslash$$ $2\mathrm{.}5\backslash )$ million; irrelevant

$($d$)\backslash (\backslash$$ $10\backslash )$ million; $\backslash (\backslash$$ $5\backslash )$ million; $\backslash (\backslash$$ $5\backslash )$ million; $\backslash (\backslash$$ $2\mathrm{.}5\backslash )$ million; $\backslash (\backslash$$ $2\mathrm{.}5\backslash )$ million; $\backslash (\backslash$$ $7\mathrm{.}5\backslash )$ million; relevant