6. The firm Kappa has just decided to undertake a major new project. As a result, the value of the firm in one year's time will be either $120 million (probability 0.25), $250 million (probability 0.5) or $360 million (probability 0.25). The firm is financed entirely by equity and has 10 million shares. All investors are risk-neutral, the risk-free rate is 4% and there are no taxes or other market imperfections. (d) Assume Kappa decides instead to issue debt with face value $100 million due in one year and repurchase shares with the proceeds. What is the firm's value now? Why? What is its share price? (5 marks) (e) Explain how the presence of corporate taxes would influence Kappa's restructuring decision. (100 words) (6 marks)