Executive Chalk is financed solely by common stock and has outstanding $38$ million shares with a market price of $$36$ a share. It now announces that it intends to issue $$540$ million of debt and to use the proceeds to buy back common stock.

a$.$ How is the market price of the stock affected by the announcement?

b$.$ How many shares can the company buy back with the $$540$ million of new debt that it issues? $($Enter your answer in millions.$)$

c$-1.$ What is the market value of the firm $($equity plus debt$)$ after the change in capital structure? $($Enter your answer in millions.$)$

c$-2.$ Did the market value of the firm change?

d$.$ What is the debt ratio after the change in structure? $($Round your answer to $2$ decimal places.$)$

e$.$ Who $($if anyone$)$ gains or loses?

a$.$ Effect on market price

b$.$ Shares repurchased million

c$-1.$ Market value million

c$-2.$ Did the market value of the firm change?

d$.$ Debt ratio

e$.$ Who $($if anyone$)$ gains or loses?