Japan Industries has no debt and expects to generate free cash flows of $17 million each year. Japan believes that if it permanently increases its level of debt to $35 million, the risk of financial distress may cause it to lose some customers and receive less favorable terms from its suppliers. As a result, Japan's expected free cash flows with debt will be only $16 million per year. Suppose Japan's tax rate is 35%, the risk-free rate is 5%, the expected return of the market is 13%, and the beta of Japan's free cash flows is 1.2(with or without leverage).

a. Estimate Japan's value without leverage.

Japan's value without leverage is $ ? million. (Round to the nearest integer.)

b. Estimate Japan's value with the new leverage

Japan's value with the new leverage is $ ? million. (Round to two decimal places.)