Green Manufacturing Inc., an all-equity firm, is currently expected to report earnings before interest and taxes (EBIT) of $150,000 per year indefinitely starting one year from now. The relevant corporate tax rate is 30% and its current (we will call this time T = 0) cost of capital is 8%. A day after T = 0 (we will call this T = +1 day), Green announces a project to be implemented right away that will require an initial investment of $200,000 and will result in an after tax project cash flow of $20,000 forever. This project will be funded entirely by fresh debt. The debt will be in the form of a perpetual, annual coupon bond that is issued at par and carries an interest rate of 5%. The bond is issued at market prices and rates. Assume that the bond will be issued and the project started a day after the announcement (we will call this T = +2 days). You may ignore any time value effects resulting from a time duration of less than 5 days as negligible. A. What is the value of the firm at T = 0? What is the value of its equity? B. What is the value of the firm at T = +1 day? What is the value of equity? C. What is the value of the firm at T = +2 days (i.e. after the issue of the bond and investment in the project)? What is the value of equity? What is the cost of equity at this time? What is the weighted average cost of capital? Ignore the following information in solving parts A, B, and C. Use it in addition to all details you have computed to this point to solve part D D. A day after the start of the project Green notices that its stock price is languishing at $45 per share (the markets are NOT efficient). It has 25,000 shares outstanding (which is unchanged since T = 0). It therefore decides to buy back 5,000 of these shares at a price of $50 per share (and so leave 20,000 after the repurchase is completed). Assume that the buyback happens instantly (we will call this T = +3 days) and the firm has sufficient cash on hand such that there is no complications due to any requirement for additional cash. On this day: i. Compute the true value (i.e. what the price would have been had the markets been perfectly efficient) per share before the repurchase. ii. Compute the true value (i.e. what the price would have been had the markets been perfectly efficient) per share after the repurchase, assuming that the repurchase is completed. iii. Assume that the markets become perfectly efficient on the day after the repurchase (T= +4days). If an investor bought Green stock at T = 0 and sold at the end of day on T=+3, what would be the raw (i.e. not annualized) returns such an investor would make