please answer all the questions at the bottom. thank you.

Unlevered Firm Levered Firm Balance Sheet Liabilities 100,000 Balance Sheet Liabilities Assets Assets Equity Equity 100,000 100,000 100,000 100,000 100,000 Rd = 5% Tax rate = 35% Price per share: $ Number of shares: 10.00 10,000 50,000 50,000 Income Statement EBIT Interest expense Taxable income Taxes Net Income Income Statement EBIT Interest expense Taxable income Taxes Net Income 50,000 (17,500) 32,500 EPS ROE EPS ROE You have decided to issue debt and buy back 1/2 of your company's stock. 1. Restate the balance sheet and income statement to reflect this transaction. 2. What is the value of the unlevered firm? 3. What is the PV of the tax shield? 4. Should you do this transaction? Why or why not? Unlevered Firm Levered Firm Balance Sheet Liabilities 100,000 Balance Sheet Liabilities Assets Assets Equity Equity 100,000 100,000 100,000 100,000 100,000 Rd = 5% Tax rate = 35% Price per share: $ Number of shares: 10.00 10,000 50,000 50,000 Income Statement EBIT Interest expense Taxable income Taxes Net Income Income Statement EBIT Interest expense Taxable income Taxes Net Income 50,000 (17,500) 32,500 EPS ROE EPS ROE You have decided to issue debt and buy back 1/2 of your company's stock. 1. Restate the balance sheet and income statement to reflect this transaction. 2. What is the value of the unlevered firm? 3. What is the PV of the tax shield? 4. Should you do this transaction? Why or why not