Here are book and market value balance sheets of the United Frypan Company (UF):

Book Value Balance Sheet
Net working capital	$190	$210	Debt
Long-term assets	250	230	Equity
	$440	$440

Market Value Balance Sheet
Net working capital	$190	$210	Debt
Long-term assets	310	290	Equity
	$500	$500

Assume that MM's theory holds with taxes. There is no growth, and the $210 of debt is expected to be permanent. Assume a 40% corporate tax rate.

a. How much of the firm's value 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 $190 more and uses it to repurchase stock?

Increase in equity value $