Belli AS has expected earnings before interest and taxes $($EBIT$)$ of $1$ million each year. Its entire

earnings after taxes are paid out as dividends. The firm is considering two alternative capital

structures. Under plan $1,$ Belli would have no debt in its capital structure. Under plan $2,$ the company

would have $4$ million of debt. The cost of debt is $10\%,$ the corporate tax rate is $35\%.$ There are no

personal taxes.

What are the total cash flows to both shareholders and bondholders under plan $1$ and plan $2?$