A company is an all-equity firm that has projected earnings before interest and taxes (EBIT) of $500,000 forever. The current cost of equity is 15% and the tax rate is 33%. The company is in the process of issuing $1.5 million of bonds at par that carry a 6% annual coupon. What is the unlevered value of the firm (in millions)? (Note: You should use MM capital structure model with corporate taxes, but without personal taxes and bankruptcy costs.)

		$2.05 million
		$2.23 million
		$2.86 million
		$3.50 million

According to the information from Question 9, what is the levered value of the firm (in millions)?_______

		$3.95 million
		$3.76 million
		$3.22 million
		$2.96 million