Upstart has 175 million shares outstanding trading at $10 per share. The firm has no debt at the moment and the cost of equity is 12%. The management team is considering a restructuring that involves: (a) issuance of $500M in long term debt at a cost rd=6%; and (b) buy back of shares for the full proceeds from the debt issuance. The plan would be to keep this new level of debt for the foreseeable future. Assume that at this level of debt the only relevant market imperfection is corporate taxes. The corporate tax rate is 35%. Question 38 (1 point) After the restructuring, the new value of Upstart's equity will be: OA) $ 1,120M OB) $ 1,250M OC) $1,315M OD) $ 1,425M QulJLIUN J I POTIL) After the restructuring, the cost of equity (TE) will be closest to: OA) 12.0% OB) 14.1% OC) 10.4% OD) 13.4% Question 40 (1 point) The number of shares Upstart will need to buy back to complete the restructuring is closest to: OA) 41.67 million shares OB) 45.45 million shares OC) 50.00 million shares OD) 55.55 million shares