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Piedmont Printing Company has a total market value of $120million, consisting of 1 million shares selling for $60 per shareand $60 million of 9% perpetual bonds now selling at par. Thecompany’s EBIT is $15.888 million, and its tax rate is 25%.Piedmont can change its capital structure by either increasing itsdebt to 65% or decreasing it to 35%. If it decides to increase itsuse of leverage, it must call its old bonds and replace them withnew ones with a 11% coupon. If it decides to decrease its leverage,it will call its old bonds and replace them with new 7% couponbonds. The company will sell or repurchase stock at the newequilibrium price to complete the capital structure change. Thefirm pays out all earnings in dividends; hence, its stock is azero-growth stock. Its current cost of equity is 13%. If itincreases leverage, the cost of equity will be 15%. If it decreasesleverage, the cost of equity will be 11%. What is the totalcorporate value if Piedmont decreases its leverage?