Keystone Corporation expects an EBIT of $47,000 every year forever. The company currently has no debt, and its cost of equity is 12%. The corporate tax rate is 23%.

a. What is the current value of the company? (4 points) b. Suppose the company can borrow at 9%. According to M&M Proposition I with taxes, what will the value of the firm be if the company takes on debt equal to 50% of its unlevered value? (4 points) c. What will the value of the firm be if the company takes on debt equal to 100% of its levered value? (4 points)