a. According the MM with taxes, the value of the firm is maximized by taking on as much debt as (2 marks) b. In presence of corporate taxes, the weighted average cost of capital is affected by the amount possible. Show graphically how adding debt can increase firm value. Explain your plots? of leverage a firm uses. Graph the relationships of the weighted average cost of capital, cost of debt, and cost of equity against leverage. Explain your plots? (2 marks) c. Arkham Inc. has equity with a market value of $29.5 million and debt with a market value of $8 million. Cost of debt is 5% per year, and the expected return on the market portfolio is 11%. The beta of Arkham's equity is 1.15. The firm pays 28% taxes. (i) What is Arkham's debt-to-equity ratio? () What is the firm's weighted average cost of capital? (iii) what is the cost of capital if the firm decides to be all-equity funded? (1 mark) (2 marks) (1 mark)