River Cruises is all-equity-financed with 42,000 shares. It now proposes to issue $170,000 of debt at an interest rate of 10% and to use the proceeds to repurchase 17,000 shares. Suppose that the corporate tax rate is 35%. Calculate the dollar increase in the combined after-tax income of its debtholders and equityholders if profits before interest are:

Increase in cash flow

a. $67,000 $_______

b. $92,000 $_______

c. $167,000 $_______