Silverman Inc. is an all-equity firm that starts making an EBIT of $2000 this year. This EBIT is expected to remain at this level forever. The current Stock price is $40/share. The number of shares outstanding is 1000. The manager is considering a leverage recap. She is planning to raise $10,000 from debt issuance, and use the proceeds to repurchase stocks. The interest rate of the debt is 2% .

1) What is the WACC of the all equity firm? What is the firm value after the leverage recap in a perfect capital market?

2) Rahul, a shareholder of the firm, owns 20 shares of stock before the leverage recap. If Varvara wants to unlever her cashflow from Silverman Inc., what does she need to do?