Cerberus Security Company produces a cash flow of $200 per year and is expected to continue doing so in the infinite future. The cost of equity capital for Cerberus is 19 percent, and the firm is financed entirely with equity. Management would like to repurchase $160 in shares by borrowing $160 at a 8 percent annual rate (assume that the debt will also be outstanding into the infinite future). Using Modigliani and Millers Proposition 1 answer the following questions.

What is the value of the firm today? (Round answer to the nearest whole dollar, e.g. 5,275.)

What will be the value of the claims on the firms assets after the stock repurchase?

What will be the rate of return on common stock required by investors after the stock repurchase? (Round answer to 2 decimal places, e.g. 17.54%.)