Greenwood Industries has 30000 shares outstanding with a current market price of 20 dollars per share and no debt. Greenwoods stock beta is 1.3. Greenwood has had consistently stable earnings, and pays a 35% tax rate. Management plans to borrow 200000 dollars on a permanent basis through a leveraged recapitalization in which they would use the borrowed funds to repurchase outstanding shares at the current market price. Assume the risk-free rate is 0.04 per annum and the market risk premium is 0.06 per annum.

Answer the following questions 3(a) to 3(f). Note: For all the calculation questions, you are only allowed to write the numerical answer you calculated for the question, please DO NOT add $, %, dollars, million, thousand, percent, space, etc. in your answers.

3(a): Estimate the companys cost of capital (as an all-equity firm) before the recapitalization.

3(b): Estimate the value of Greenwood's unlevered equity before the recapitalization.

3(c): Estimate the present value of Greenwood's interest tax shield if the company implements the leverage recapitalization.

3(d): What is the total value of Greenwood as a levered firm after the recapitalization?

3(e): What is the value of a share of Greenwood 's stock after the recapitalization?

3(f): Comment on the statement It is in the best interest of the shareholders to choose the capital structure that leads to the highest expected return for the stock.