Here are book and market value balance sheets of the United Frypan Company (UF): Book Value Balance Sheet Net working capital $ 70 $ 90 Debt Long-term assets 130 $200 $200 110 Equity Market Value Balance Sheet Net working capital $ 70 $ 90 Debt Long-term assets 190 170 Equity $260 $260 Assume that MM's theory holds with taxes. There is no growth, and the $90 of debt is expected to be permanent. Assume a 40% corporate tax rate. a. How much of the firm's value in dollar terms is accounted for by the debt-generated tax shield? PV tax shield b. How much better off will UF's shareholders be if the firm borrows $70 more and uses it to repurchase stock? Increase in equity value