GenCorp currently has 6%, perpetual debt and 10,000 shares outstanding. The debt accounts for 25% of firm value. The firms EBIT is $100,000 with zero growth. Current cost of equity is 10% and the tax rate is 40%. a. (4pts) What is the firms current total market value? b. (1pt) What is the firms current stock price? The firm is considering recalling existing debt and issuing new debt at 7% which will increase the debt ratio from 25% to 40%. The new funds will be used to replace the old debt and repurchase stock. The cost of equity will increase to 11%. c. (5pts) Outline the steps in the market prices adjustment to the new plan. What will be the new stock price after the recapitalization?