Newkirk, Inc., is an unlevered firm with expected annualearnings before taxes of $22 million in perpetuity. The currentrequired return on the firm’s equity is 20 percent, and the firmdistributes all of its earnings as dividends at the end of eachyear. The company has 1.4 million shares of common stockoutstanding and is subject to a corporate tax rate of 35 percent.The firm is planning a recapitalization under which it will issue$31 million of perpetual 10 percent debt and use the proceeds tobuy back shares. a-1. Calculate the value of the company before therecapitalization plan is announced. (Enter your answer in dollars,not millions of dollars, e.g., 1,234,567. Do not round intermediatecalculations and round your answer to the nearest whole number,e.g., 32.) Current value $ a-2. What is the price per share? (Donot round intermediate calculations and round your answer to 2decimal places, e.g., 32.16.) Price per share $ b-1. Use the APVmethod to calculate the company value after the recapitalizationplan is announced. (Enter your answer in dollars, not millions ofdollars, e.g., 1,234,567. Do not round intermediate calculationsand round your answer to the nearest whole number, e.g., 32.) Valueafter recapitalization $ b-2. What is the price per share after therecapitalization is announced? (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.) Price per share $ c-1. How many shares will be repurchased?(Enter your answer in dollars, not millions of dollars, e.g.,1,234,567. Do not round intermediate calculations and round youranswer to the nearest whole number, e.g., 32.) Shares repurchasedc-2. What is the price per share after the recapitalization andrepurchase? (Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.) Price per share $ 73.30d. Use the flow to equity method to calculate the value of thecompany’s equity after the recapitalization. (Enter your answer indollars, not millions of dollars, e.g., 1,234,567. Do not roundintermediate calculations and round your answer to the nearestwhole number, e.g., 32.) Value of the equity $ 2. If Wild Widgets,Inc., were an all-equity company, it would have a beta of 1.7. Thecompany has a target debt–equity ratio of .6. The expected returnon the market portfolio is 10 percent, and Treasury bills currentlyyield 5.7 percent. The company has one bond issue outstanding thatmatures in 20 years and has a coupon rate of 10.4 percent. The bondcurrently sells for $1,250. The corporate tax rate is 34 percent.a. What is the company’s cost of debt? (Do not round intermediatecalculations and enter your answer as a percent rounded to 2decimal places, e.g., 32.16.) Cost of debt % b. What is thecompany’s cost of equity? (Do not round intermediate calculationsand enter your answer as a percent rounded to 2 decimal places,e.g., 32.16.) Cost of equity % c. What is the company’s weightedaverage cost of capital? (Do not round intermediate calculationsand enter your answer as a percent rounded to 2 decimal places,e.g., 32.16.) WACC %