Leno firm has no debt. It has 175M shares outstanding trading at $15 per share. The firm is considering a restructuring which involves: issuance of $750M in long term debt and buying back shares with the cash raised. The plan would be to keep this new dollar value of debt forever. Corporate taxes = 30% (with no financial distress).

After the restructuring the new value of equity will be:

$1900

$2000

$2100

$2200