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

Book

Net working capital	$ 40		$ 60	Debt
Long-term assets	100		80	Equity
	$140		$140

Market

Net working capital	$ 40		$ 60	Debt
Long-term assets	160		140	Equity
	$200		$200

Assume that MM's theory holds with taxes. There is no growth, and the $60 of debt is expected to be permanent. Assume a 35% 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 $40 more and uses it to repurchase stock?

Increase in debt

$