(a)Assume that as of 15 Jan 2020, Hi-Tech had no debt or cash. The firm's managers consider recapitalising the firm by issuing zero-coupon debt with a face value of $30 billion due in Jul of 2022, and using the proceeds to repurchase shares. Assume that before issuing the debt, Hi-Tech had 545.45 million shares outstanding and a market capitalisation of $34.91 billion. Assume perfect capital markets. Use the option data from 15 Jan, 2020 in the following figure to determine:

i.Hi-Tech's firm value after debt issuance;

ii.the equity value after debt issuance; and

iii.the market value of debt and cost of debt.

(6 marks)