NC Inc. currently has no debt. The firm's cost of equity is 10% and the expected free cash flow is $28 million per year in perpetuity. You are the CEO of the company and believe that changing the firm's capital structure will increase firm value. You, therefore, plan to change the firm's capital structure to 30% debt-to-equity ratio and use the proceed to buy back shares. After restructuring, the expected cost of capital will be 7.78%.

Assume that after restructuring the firm's capital structure will remain at 30% forever.

The corporate tax rate is 15%. There are no other market imperfections.

What is the value of the firm (in million $) under current capital structure with no debt?

What is the value of the firm (in million $) under the new capital structure?

What is the present value of the interest tax shield?