Oriel Foods shares have a market price of $20 per share. The firm has 30 million shares outstanding, no debt, consistently stable earnings, and pays a 35% tax rate. Management plans a leveraged recapitalization and will borrow $200 million at 8% on a permanent basis which they will use to repurchase outstanding shares.

a) What is the value of Oriels unlevered equity?

b) What is the present value of Oriels interest tax shield?

c) Find the total value of Oriel as a levered firm after the recapitalization.

d) Find the value of Oriels levered equity and the value of a share of Oriels stock after the recapitalization.