Consider two firms that are identical except the method of financing. Firm U has no debt, and firm L has $20 million of debt outstanding at 10%. The corporate tax rate is 40%. The cost of equity is 15%. The EBIT is equal to $4 million per year. What is the value of U ? What is the value of firm L according to MM? What is the gain from leverage? What is the cost of equity of the leverage firm? What is the value of equity in the leveraged firm?