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Given the following information about the FIN454 Company: the firm that has no debt and has a market value of $100 million and a cost

Given the following information about the FIN454 Company: the firm that has no debt and has a market value of $100 million and a cost of equity of 11%. Using the Miller-Modigliani model,

a. What happens to the value of the firm as the leverage is changed? (Assume no taxes)

b. What happens to the cost of capital as the leverage is changed? (Assume no taxes)

c. How would your answers to (a) and (b) change if there are taxes?

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