Here are book and market value balance sheets of the United Frypan Company: Book value balance sheet Net Working Capital 20 Long-term assets Debt 40 80 Equity 60 100 Market value balance sheet 100 Net Working Capital 20 Debt Long-term assets 40 140 Equity 120 160 160 Assume that MM's theory holds with taxes. There is no growth and the $40 of debt is expected to be permanent. Assume a 40% corporate tax rate. a) How much of the firm's value is accounted for by the debt-generated tax shield if Congress passes a law which eliminates the deductibility of interest for tax purposes after a grace period of 5 years. (Assume an 8% borrowing rate.)