Monsters, Inc. currently has no debt, but is considering recapitalizing the firm. Specifically, it is planning to issue $120 million of debt and use the proceeds to buy back shares of stock. Right now, the firm has a tax rate of 22%, has 6 million shares of stock trading at $50 per share, and the cost of capital is 12%. The firm can borrow at 7%. Take all calculations out at least 2 decimal places and clearly label your answers. Assume you are in the Modigliani and Miller theoretical framework, with taxes, and that those theoretical assumptions hold.

Part A: After the restructuring is complete, what is the value of the firm?

Part B: After the restructuring is complete, what is the firms debt-equity ratio?

Part C: After the restructuring is complete, what is the firms cost of equity?