Firm A currently has no debt in its capital structure (i.e., an all-equity firm). The stock of the firm is trading at $7

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Firm A currently has no debt in its capital structure (i.e., an
all-equity firm). The stock of the firm is trading at $75 per
share. The firm has 150 million shares outstanding. The company is
considering leveraged recapitalization. Under the recapitalization
plan, the firm would issue $3 billion perpetual debt and use the
entire amount to repurchase an equivalent value of outstanding
shares. The firm would issue the debt at par. The before-tax cost
of debt is 7%. The firm’s tax rate is 25 percent. Assume that the
share price fully reflects the value of the debt financing
immediately after the plan is announced. Ignore bankruptcy costs,
transaction costs, and signaling, incentive, clientele, and other
effects.
a) Use the adjusted present value (APV) approach to find the
stock price per share after the leveraged recapitalization plan is
announced.
b) How many shares will be repurchased using the $3 billion debt
issue? What is the number of shares outstanding after the share
repurchase? Assume that the firm repurchases shares soon after the
debt financing announcement and that the announcement is the only
news about the company at the time.
c) Find the market value weight of debt (as % of total capital)
and market value weight of equity (as % of total capital) after the
recapitalization with share repurchase.