Part III: Long Question (25 marks) ABC Inc. is an unlevered firm. The current required return on the firm's equity is unlevered cash inflow is $2 million. This cash inflow will grow the fifth year and remain constant forever hereafter. The firm is planning a recap it will issue $5 million of perpetual 8% debt and use the proceeds to buy back shares. Required: a) Caleulate the value of the firm before the recapitalization plan is announced. b) Calculate the value of the firm after the recapitalization plan is announced. 15%. The current at a constant rate of 5% until the end of italization under which The tax rate is 30% 6 marks) (2 marks) In the end ofyear 5, the firm changes its capital structure as a target debt-equity ratio 40%. (Using this additional information to answer the following questions) c) Assume the cost of debt is remain 8%, what is the weighted average cost of capital? (6 marks) d) What is the value of the firm in year 5? e) What is the value of the firm now? [Hint: use APV method (2 marks) 9 marks)