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

Book

Net working capital	$ 70		$ 90	Debt
Long-term assets	130		110	Equity
	$200		$200

Market

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 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, assuming the increase in debt does not increase the risk of old debt?

Better off by

$