1. Xavier is an all-equity funded firm with 100 million shares trading at $20/share, with a cost of equity of 11.5%. The firm is considering borrowing $1.2 billion and using the entire proceeds to buy back shares, an action that it believes will lower its cost of capital to 10%. Assuming that the firm is a mature firm with no growth expected in the future, estimate the change in value of the firm according to the incremental value approach.
   1. $300 Million
   2. $350 Million
   3. $400 Million
   4. $450 Million
   5. $500 Million