International Health Associates (IHA) is just about to commence operations as an international health consulting firm. The firm will have book assets of $10 million, and it expects to earn a 16 percent return on these assets before taxes (EBIT = 16% x $10 million). However, because of certain tax arrangements with foreign governments, IHA will not pay any taxesthat is, its tax rate will be zero. Management is trying to decide how to raise the required $10 million. It is known that the required rate of return for an all-equity firm in this business is 11 percentthat is, R(Reu) = 11%. Further, IHA can borrow at a rate of R(Rd) = 6%. According to MM without taxes, what will be the value of IHA if it uses no debt? If it uses $6million of 6 percent debt? (Note: Since the tax rate is zero, the value of a levered firm will equal the value of an unlevered firm. VL = VU.) (Assume no financial distress costs, and assume EBIT will be the same each year in perpetuity.) (Hint: You should find that the value of the firm is greater than the $10 million. Value is created.) Type your answer to the nearest dollar.

b. Continuing from the previous two IHA questions, what is IHA's CCC? Type your answer as a percent. Round to zero decimal places. (Note how this answer compares to the IHA's CCC and R(Reu) two questions ago.)