Kurz Manufacturing is an all-equity firm with 50M shares outstanding at a price of $10.00 per share. Kurz will announce tomorrow that it will immediately borrow $200M and use this cash to repurchase shares. Kurz plans to hold this debt in perpetuity. Assume a corporate tax rate of 40%.

a) What is the market value of Kurz's existing assets before the announcement?

b) What is the market value of Kurz's assets (including the value of the tax shield) just after the debt is issued, but before the shares are repurchased?

c) What is Kurz's share price just before the share repurchase? How many shares will Kurz repurchase?

d) What are the values of Kurz's assets and equity after the share repurchase? What is the share price after the repurchase?