Squid Gaming Inc. is unlevered and expects its EBIT to be $150 million every year forever. The cost of equity for Squid is 9%, and its tax rate is 25%. The firm can currently borrow long-term debt at a 5% interest rate. Under consideration is issuing $500 million in new debt, and the proceeds of the debt issuance would be used to immediately repurchase $500 million of stock. Ignore any financial distress costs for purposes of answering parts a and b to this question and assume that the firm has enough taxable income that the firm will always be ableto use the interest tax shield in other words, the debt will be outstanding FOREVER. Use Modigliani and Miller(MM)propositions I and II with corporate taxes and the related formulas to answer a and b. a.What is the value of the unlevered firm before the recap? b.What is the value of the firm if it borrows $500 million and repurchases shares? c.If you were to also consider potential financial distress costs from borrowing, would you expect the value in part b to be higher or lower than your estimate in b? Briefly explain your answer.