(1) Here are book and market value balance sheets of the United Frypan Company (UF): Book Net working capital $ 20 $ 40 Debt Long-term assets 80 60 Equity $100 $100 Market Net working capital $20 $ 40 Debt Long-term assets 140 120 Equity $160 $160 Assume that M&M's theory holds with taxes. There is no growth, and the $40 of debt is expected to be permanent. Assume a 40% corporate tax rate. (2) Cowen Company has EBIT of 600,000, company's Debt-to-equity ratio (market value) is 0.6, and the market value of debt is 2,000,000. Assume there is no tax and you can borrow at the cost of the company's cost of debt, you own 1000 shares of Cowen's stock. How many shares of Cowen's stock will you continue to own by borrowing if you try to make this position unlevered? (10 marks) (1) Here are book and market value balance sheets of the United Frypan Company (UF): Book Net working capital $ 20 $ 40 Debt Long-term assets 80 60 Equity $100 $100 Market Net working capital $20 $ 40 Debt Long-term assets 140 120 Equity $160 $160 Assume that M&M's theory holds with taxes. There is no growth, and the $40 of debt is expected to be permanent. Assume a 40% corporate tax rate. (2) Cowen Company has EBIT of 600,000, company's Debt-to-equity ratio (market value) is 0.6, and the market value of debt is 2,000,000. Assume there is no tax and you can borrow at the cost of the company's cost of debt, you own 1000 shares of Cowen's stock. How many shares of Cowen's stock will you continue to own by borrowing if you try to make this position unlevered? (10 marks)