Suppose that the Moon Lighting Company makes a decision to partition its assets into equity and debt. The firm issues $2 million of debt at a cost of 15 percent. The partitioning does not change the firms total cash flow before taxes; it remains at $725,000. The number of shares outstanding, however, has been reduced from 2 million to 1 million.

Compute Moons taxes owed using a tax rate of 34 percent. What accounts for the difference between the taxes owed here and those owed in Problem 2?

Compute Moons net income after tax and after-tax equity earnings per share.

please show work. I am trying to find in my textbook but I need help.