O MM with Corporate Terms U L Debt OS 11,00 million 0 B.ON SU 15,0% 15,0% $ 3,00 S 3,00 million Tax rate 35% 35% EBIT 11

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O Mm With Corporate Terms U L Debt Os 11 00 Million 0 B On Su 15 0 15 0 3 00 S 3 00 Million Tax Rate 35 35 Ebit 11 1 (32.76 KiB) Viewed 39 times

O MM with Corporate Terms U L Debt OS 11,00 million 0 B.ON SU 15,0% 15,0% $ 3,00 S 3,00 million Tax rate 35% 35% EBIT 11 Pirms and are idential in very respect. The information for firms and to the right → Assume that: (1) All of the MMsumption are met. (2) Both firms are subject to the same federal plus state corporate tax rate the same for both firem (5) The unlevered cost of equity is the same for both firms a. What valor would MM now estimate for each flem? (rint: the Proposition is points) b. What is is for it? (Spoints) c. Finds, and then show that SD-Vi results in the same value as obtained in Parta. 15 points) d. What is the WACC for Form U? for Farmt? (10 points) Please show work and answer questions completely to receive full credit 12 13 18 17 19 VU million million + b PS MC SE SL+D million million 27 old WACCU WACO