Bueller, Incmanufactureswidgits for wagonsand is currently worth $9,000,000. The company is financed entirely by common stock: 1,200,000 shares at $7.5 per share. Thecompany's beta is 0.80.The company is considering substituting debt for equity bybuying back sharesand issuing$4,000,000 of 5 percent debt.The tax rate is 35 %.AssumeM&M with taxesto answer the following question.

a. What will thevalue of the new levered firmbe? (Show your work)

b. What will thevalue of equitybe for thenew levered company?

c. What will thebetafor thenew levered firmbe?