Boston Cube Inc. currently has no debt, annual free cash flows of $74 million and an average tax rate of 34%. Free cash flows are expected to grow by 5% per year forever.

Using the CAPM, the firm estimates that its cost of equity is 12%. The risk-free rate is 2% and the expected equity market risk premium (MRP) is 7%. There are 8 million shares outstanding.

The firm is considering a new capital structure with a debt-to-capital ratio of 20%. The company would issue bonds to repurchase its own shares at the market price. An investment bank has estimated that the yield to maturity on the company's bonds would be 3%.

stock price before the recapitalization is 138.75

Part 2: What will be the WACC after the recapitalization?

Part 3: What will be the stock price after the recapitalization and how many shares will be outstanding at that price?