Northgate Inc. has 20 million shares outstanding, which are trading at $60 per share. Northgate maintains a constant debt level of $100 million. Suppose Northgate announces the following recapitalization plan: it will issue additional $600 million of debt and use all the proceeds to repurchase shares. After this recapitalization, it will maintain its debt level indefinitely. The tax rate is 35% and the annual interest rate of the debt is 7%. Assume that the only financial friction is tax, answer Question a) and Question b). a. What will be the value of equity after the recapitalization