Loubita Company currently has a debt-equity ratio of 1/7. The stock price is $65 and there are 140,000 shares outstanding. The CFO is proposing a recapitalization plan to borrow $1,200,000 and use the proceeds to buy back shares. They can borrow at 6% and their tax rate is 20%.

Based on this information, please fill in the following blanks.

1. The annual interest expense for the $1,200,000 debt is $

2. The annual interest tax shield for the $1,200,000 debt is $

3. The present value of the interest tax shield for the $1,200,000 debt is $

4. The market value of the existing debt before the repurchase announcement is $

5. The market value of the TOTAL debt after the repurchase has taken place is $

6. The market value of the equity before the repurchase announcement is $

7. The market value of the equity after the repurchase has taken place is $

8. The number of shares repurchased is (round to the nearest integer please)

9. The share price per share after the repurchase has been announced (use 2 digits after the decimal please) $

10. The hypothesis which explains the immediate reaction of the stock price to the repurchase announcement is called the hypothesis.