A firm is currently unlevered with $1,000,000 shares each priced at $50. The firm is debating of changing its capital structure by taking $20,000,000 in debt and repurchasing shares. It will pay down this debt by $4,000,000 every year. If the tax rate is 40% and cost of debt is 8%.

1. 1. Show the current Balance Sheet of the firm (unlevered)
2. 2. Show the timeline that presents the annual balance of debt, interest, and tax shield every yea
3. 3. What is the present value of the interest tax shield?
4. 4. What is the value of the restructured (levered) firm?