I need some help answering 2 finance homework questions. If you could please include the work. Thank you for your help.

Lindbergh Company has the following date related to its capital structure: CASE A CASE B EBIT (in perpetuity): $205,000 EBIT (in perpetuity): $205,000 Rate on debt: 5.0 % Rate on debt: 5.0 % Cost of Equity: 12.0% Cost of Equity: 12.0% Tax Rate: 35.0% Tax Rate: 35.0% Debt: 0 Debt: Borrow $135,000 to buy share Will have debt in perpetuity What is the value of unlevered firm (Case A) and the levered firm (Case B) A. Vu = 1,110,416.67; Vl = 1,157,666.67 B. Vu = 1,010,416.67; Vl = 1,117,166.67 C. Vu = 1,708,333.33; Vl = 1,157,666.67 Prescott Inc. has the following data regarding its financial structure: Market value of outstanding debt: $2,500,000 Value of firm if financed with all equity: $14,450,000 Number of shares outstanding: 250,000 Current price per share: $38.00 Tax rate: 35 % What is the decrease in firm value due to expected bankruptcy costs? A. $3,325,000 B. $4,950,000 C. $875,000 CASE A CASE B EBIT (in perpetuity): $205,000 EBIT (in perpetuity): Rate on debt: 5.0 % Rate on debt: 5.0 % Cost of Equity: 12.0% Cost of Equity: 12.0% Tax Rate: 35.0% Tax Rate: 35.0% Debt: 0 Debt: Borrow $135,000 to buy share Will have debt in perpetuity $205,000

Lindbergh Company has the

1. Lindbergh Company has the Following date related to its capital structure: What is the value of unlevered firm (Case A) and the levered firm (Case B) Correct Answer A. Vu = 1,110,416.67; Vl = 1,157,666.67 B. Vu = 1,010,416.67; Vl = 1,117,166.67 You Answered C. Vu = 1,708,333.33; Vl = 1,157,666.67 Incorrect. You did not consider taxes in calculation of the unlevered firm. 2. Prescott Inc. has the following data regarding its financial structure: Market value of outstanding debt: Value of firm if financed with all equity: Number of shares outstanding: Current price per share: Tax rate: $2,500,000 $14,450,000 250,000 $38.00 35 % What is the decrease in firm value due to expected bankruptcy costs? Correct answer is A A. $3,325,000 B. $4,950,000 C. $875,000 Your answer: $857,500 this is not even an answer choice. Incorrect. Tax rate times the amount of debt outstanding is not the decrease in value due to bankruptcy costs. = 1,708,333.33; Vl = 1,157,666.67