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4. Tool Mfg has an expected EBIT-$67,000 in perpetuity and a tax rate-35%. The firm has $139,000 in outstanding debt at an interest rate 6.85%.

4. Tool Mfg has an expected EBIT-$67,000 in perpetuity and a tax rate-35%. The firm has $139,000 in outstanding debt at an interest rate 6.85%. It's unlevered cost of capital is 10.25%. What is the value of the firm according to M&M Proposition 1 with taxes? Should the company change its D/E ratio if the goal is to maximize the value of the firm

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