Yesterday Quinella Inc had a no debt and its equity was worth 500 million. Its equity investors expected 10% returns per year. Today, Quinella announced a financial recapitalization plan to borrow 200 million at a 6% yield and use the entire proceeds to buyback stock.

A.) If quinella pays no taxes and there are no other special advantages or disadvantages of debt financing, what will the value of the firms capital be after it issues the debt? briefly discuss

B) If Quinella pays no taxes and there are no other special advantages or disadvantages of debt financing, what will the firms cost of equity be after it issues the debt? Briefly discuss

C.)If Quinella's marginal corporate tax rate is 35% but becasue of deductions, last year Quinella's average effective tax rate was only 28%, and if there are no other special advantages or disadvantages of debt financing, what will the value of the firms capital be after it issues the debt? Discuss