It is January 1st 2020, on the day before, December 31st 2019, Alamo Co. reported a net income of 4,009,000 dollars. To this date the company is unlevered and its real EBITDA is constant. The company acquired the year before (on January 1st 2019) a new plant for 36,000,000 dollars, that the fiscal law allowed to depreciate straight line either in 3 (Plan 1) or 6 years (Plan 2). All other assets are fully depreciated. Today, the company announces a recapitalization in which it will issue risky debt and retire equity for an amount of 65,000,000 dollars. The company then plans to keep a constant debt level. Before the announcement, the unlevered equity return is 7.65%. Assume that the inflation rate is 2.5%, that the debt beta is 0, that the expected market return is 8.00%, that the risk free rate is 4.50% and that the tax rate is 30%. Finally assume that the depreciation tax shield is as risky as the company's debt. a) What is the depreciation plan chosen by the firm? Why? [4 Points b) What is the return experienced by the shareholders immediately after the recapitalization announcement (but before the recapitalization is carried out)? [16 Points) c) What is the beta of levered equity? [7 Points]