a.) Suppose a company had an unlevered value of $150 million. The marginal tax rate is 25% and it has $45 million in debt. According to MM's proposition with taxes, what is the levered value of the company in millions?

a.)$161.25

b.)$105.75

c.)$116.25

b.) A company is currently in this situation: (1) tax rate, T = 25% ; (2) value of debt, D = $4m; (3) rd = 10% ; (4) rs = 25% ; (5) shares of stock outstanding, n = 400,000; and (6) stock price, P = $25. The firm's market is stable and it expects no growth, so all earnings are paid out as dividends. The debt consists of bonds. Compute the WACC.