If the Modigliani-Miller theorem assumptions are met. A firm is only equity financed. If its earning is 5 million per year and will last to perpetuity. the current value of the firm is 60 million. If it issues risk free debts of 25 million and it matures in 5 years at a 3% interest rate to repurchase 25 million of equity.

1. What is the total value of the firm

2. What is the return on equity after refinancing

3, if Karl owns 0.2 million of the firm stock before refinancing what he should do to maintain the same return after refinancing . Show the return for him before and after refinancing.