Executive Chalk is financed solely by common stock and has outstanding $25$ million shares with a market price of $$10$ a share. It now

announces that it intends to issue $$160$ million of debt and to use the proceeds to buy back common stock.

a$.$ How is the market price of the stock affected by the announcement?

b$.$ How many shares can the company buy back with the $$160$ million of new debt that it issues?

Note: Enter your answer in millions.

c$-1.$ What is the market value of the firm $($equity plus debt$)$ after the change in capital structure?

Note: Enter your answer in millions.

c$-2.$ Did the market value of the firm change?

d$.$ What is the debt ratio after the change in structure?

Note: Round your answer to $2$ decimal places.

e$.$ Who $($if anyone$)$ gains or loses?