Your job is to analyze the effects of a recapitalization where Ford would issue $10B worth of bonds and use the proceeds to repurchase shares. Assume that these bonds would have to pay an interest rate of 6%, and that Ford intends this to be a permanent leverage increase. Your answer should include: (i) the present value of the new tax shield (ii) how the book value balance sheet would look after the recap is completed (you don't need to reproduce everything on the balance sheet - just say what would change) (iii) how the market value balance sheet would look before the recap is announced, after the announcement, and after it is completed (iv) the (fair) price at which the shares will be repurchased (v) a brief discussion of whether the recapitalization is a good idea and a few factors that Ford should consider (though no further calculations are necessary) Balance Sheet (in millions of US\$s) \begin{tabular}{|l|l|} \hline Cash and Cash Equivalents & $49,593 \\ \hline Other Current Assets & $59,403 \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline Fixed Assets & $63,500 \\ \hline Other Long-Term Assets & $84,539 \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline Total Assets & $257,035 \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline Short-Term Debt & $50,037 \\ \hline Other Current Liabilities & $40,690 \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline Long-Term Debt & $99,448 \\ \hline Other Long-Term Liabilities & $28,238 \\ \hline \end{tabular} \begin{tabular}{|l|l|l} \hline Total Liabilities & $208,413 \\ \hline \end{tabular} \begin{tabular}{|l|r|} \hline Stockholders' Equity & $48,622 \\ \hline \end{tabular} Total Liabilities and Equity