This exercise consists of a set of incomplete worksheets with which students must calculate (1) the effect of hypothetical changes in capital structure on firm value, and (2) the effect of a major recapitalization on the share price of Koppers Company. Illustrating in particular Modigliani and Miller's theory about the relationship between debt and firm value in a taxable world, this exercise lays important conceptual foundations in the area of firm valuation and sketches the three classic approaches to valuing the firm.