Assume that MM's theory holds except for taxes. There is no growth, and the $80 of debt is expected to be permanent. Assume a 32% corporate tax rate.

a.How much of the firm's market value is accounted for by the debt-generated tax shield?

b.What is United Frypan's after-tax WACC ifr_Debt= 6.5% andr_Equity= 16.5%?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c.Now suppose that Congress passes a law that eliminates the deductibility of interest for tax purposes after a grace period of 5 years. What will be the new value of the firm, other things equal? Assume a borrowing rate of 6.5%.(Do not round intermediate calculations. Round your answer to 2 decimal places.)

OP LU email }}) LU lib YTD Swapsy Saved Help Save & Exit Here are book - and market-value balance sheets of the United Frypan Company:" \Book - Value Balance Sheet Net working capital BB $ Debt 80 Long- term assets 70 Equity 20 180 $ 108 \Market - Value Balance Sheet 88 Net working capital $ BB Debt* Long - term assets 170 \Equity 120 2 0 0 \2 80 $ Assume that MM's theory holds except for taxes. There is no growth , and the $80 of debt is expected to be permanent . Assume a 32% corporate tay rate . a . How much of the firm's market value is accounted for by the debt - generated tax shield ?" PV tax shield