Here are book- and market-value balance sheets of the United Frypan Company (figures in $ millions):

Book-Value Balance SheetNet working capital$50Debt$60Long-term assets50Equity40$100$100

Market-Value Balance SheetNet working capital$50Debt$60Long-term assets205Equity195$255$255

Assume that MM's theory holds except for taxes. There is no growth, and the $60 of debt is expected to be permanent. Assume a 21% corporate tax rate.

a.How much of the firm's market value is accounted for by the debt-generated tax shield?(Enter your answer in million rounded to 2 decimal places.)

b.What is United Frypan's after-tax WACC ifr_Debt= 7.2% andr_Equity= 15.8%?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c.Now suppose that Congress passes a law that eliminates the deductibility of interest for tax purposes after a grace period of 5 years. What will be the new value of the firm, other things equal? Assume a borrowing rate of 7.2%.(Do not round intermediate calculations. Enter your answer in million rounded to 2 decimal places.)

a.PV tax shield million

b.WACC%

c.New value of the firm million