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

Book-Value Balance Sheet

Net working capital $35 Debt $55

Long-term assets 65 Equity 45

$100 $100

Market-Value Balance Sheet

Net working capital $35 Debt $55

Long-term assets 170 Equity 150

$205 $205

Assume that MM's theory holds except for taxes. There is no growth, and the $55 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= 7.7% andr_Equity= 15.3%?(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 7.7%.(Do not round intermediate calculations. Enter your answer in million rounded to 2 decimal places.)