1. ABC Corp and MMM Corp are identical in every way except their capital structures. ABC Corp., an all-equity firm, has 20,000 shares of stock outstanding, and it's cost of capital is 6.45%. MMM Corp. uses leverage in its capital structure. The market value of MMM's debt is $85,000, and it's cost of debt is 9%. Each firm is expected to have earnings before interest (EBIT) of $93,000 in perpetuity. Assume that the marginal tax rate for each firm is 22%. How much will it cost to purchase 20% of MMM's equity? a. $175,432.31 b. $237,652.81 c. $198,478.26 d. $228,670.23 e. None of the above