Overnight Publishing Company (OPC) has $4.1 million in excess cash. The firm plans to use this cash either to retire all of its outstanding debt or to repurchase equity. The firm’s debt is held by one institution that is willing to sell it back to OPC for $4.1 million. The institution will not charge OPC any transaction costs. Once OPC becomes an all-equity firm, it will remain unlevered forever. If OPC does not retire the debt, the company will use the $4.1 million in cash to buy back some of its stock on the open market. Repurchasing stock also has no transaction costs. The company will generate $1,460,000 of annual earnings before interest and taxes in perpetuity regardless of its capital structure. The firm immediately pays out all earnings as dividends at the end of each year. OPC is subject to a corporate tax rate of 37 percent, and the required rate of return on the firm’s unlevered equity is 18 percent. a. What is the value of OPC if it chooses to retire all its debt and become and unlevered firm? Assume no bankruptcy cost. b. What is the value of OPC if it decides to repurchase stock instead of retiring its debt. Assume no bankruptcy costs. C. What is the value of Dell it the expected costs have a present value of $560,000? D. Which plan would you recommend if there are bankruptcy costs?