Cerberus Security generated a cash flow of $200 and is expected to continue to do so indefinitely into the future. The cost of equity capital for Cerberus is 20 percent, and the company is financed entirely with equity. The company wants to buy back $100 of stock by borrowing $100 at 10 percent interest (assume that the debt will also be outstanding to an indefinite future). Using Modigliani and Miller's Proposition 1, what is the current value of the company, and what is the value of the claim on the company's assets after the share repurchase? What is the return on common stock required by the investor after the stock repurchase? Infinitum SA has 250 million in debt at an interest rate of 11 percent. What is the present value of the debt tax shield if the debt is due in five years (and no new debt will replace the old debt), assuming that Infinitum is subject to a marginal tax rate of 40 percent? The following is a discussion about dividends You discover that you are the only investor who owns certain shares that are subject to a 15 percent tax rate on dividends (all other investors are subject to a 5 percent tax rate on dividends). Is there a greater value for you to keep the stock after the ex-dividend date or sell the stock and buy back the stock on or after the ex-dividend date? Assume that the stock is currently selling for 10.00 and the dividend is 0.25 per share