F genius ltd, is an unlevered firm with expected annual earnings before taxes of $30 million in perpetuity. The current required return on the firm’s equity is 15% p. A. Compounded annually, and the firm distributes all of its earnings as dividends at the end of each year. The company has 2. 8 million shares of common stock outstanding and is subject to a corporate tax rate of 30 percent. The firm is planning a recapitalization under which it will issue $50 million of perpetual 6 percent debt and use the proceeds to buy back shares.