Consider a firm that is currently all-equity financed. The firm produces a perpetual EEit of 590m per annum and has an all-equity cost of capital (required return on equity) of 12 per cent. The corporate tax rate is 30 per cent, and the interest rate on debt is 25 per cent. The company is to be acquired under a LBO, under which an initiat tevel of debt of s4O0m will be taken or, with repayment of $100m per year and interest on the principal at the end of each of years 1,2, and 3 . A level of debt of 5100m will then be maintained in perpetuity. a. Calculate the presert value of interest tax shield, you may assume that you can discount any debt-related cash flows at the cost of debt. (12 marks) b. Calculate the value of the firm before LBO (5 marks) c. Calculate the value of the firm following L8O using the APV method