Judge Corp. is unlevered and is valued at $100,000,000. Judge is currently deciding whether including permanent debt in its capital structure would increase firm value. The current cost of capital (unlevered cost of equity) is 12%. Under consideration is issuing $50,000,000 in new debt at a 6% interest rate, and the proceeds of the debt issuance would be used to immediately repurchase $50,000,000 of stock. The effective marginal tax bracket is 30%. Ignore any financial distress costs for purposes of answering this question and assume that the firm has enough taxable income that the firm will always be able to use the interest tax shield in other words, the debt will be outstanding FOREVER. Use Modigliani and Miller (MM) propositions I and II with corporate taxes and the related formulas to answer the questions below.

a. What is the value of the levered firm after the recap? (2 points)

b. What is the cost of equity after the recap? (2 points)

c. What is Judges weighted average cost of capital after the recap? (2 points)