eBook MM with Corporate Taxes Companies U and L are identical in every respect except that U is unlevered while L has $20 million of 7% bonds outstanding. Assume that: (1) All of the MM assumptions are met. (2) Both firms are subject to a 35% federal-plus-state corporate tax rate. (3) EBIT is $3 million. (4) The unlevered cost of equity is 13%. a. What value would MM now estimate for each firm? (Hint: Use Proposition 1.) Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answers to two decimal places. Company U: $ 15.00 million Company L: $ 20.25 million b. What is rs for Firm U? Round your answer to one decimal name b. What is rs for Firm U? Round your answer to one decimal place. 26 % A-Z What is rs for Firm L? Do not round intermediate calculations. Round your answer to one decimal place. Jo c. Find Su and then show that S + DV results in the same value as obtained in Part a. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places. SL - $ million SL+D $ million SL + D = $ million A-Z d. What is the WACC for Firm U? Do not round intermediate calculations. Round your answer to two decimal places % What is the WACC for Firm L? Do not round intermediate calculations. Round your answer to two decimal places %