Biotech is an all equity financed firm with a market capitalization of 175 million that has 10 million shares outstanding. The firm has spent the last years developing a new malaria medication which has very recently won regulatory approval. The medication will enter the market next month and is expected to create a stream of stable earnings. Biotech does note plan to develop any further medications. The corporate tax rate is 25%.The firm announces that it will issue 100 million of permanent debt to repurchase shares.

(a) What is the lowest share price at which Biotech can repurchase its shares?

(b) What will be the firms stock market capitalization after the transaction?

(c) Why would Biotech not have benefited from additional tax shields by issuing debt earlier?