Kline Engineering is an all-equity firm that has projected perpetual EBIT of $300,000. The current cost of equity is 15 percent and the tax rate is 21 percent. The company is in the process of issuing $500,000 worth of perpetual bonds with an annual coupon rate of 6 percent at par. The cost of debt is 8%. The questions on Kline Construction have three parts. Answer the questions under the assumptions of MM propositions with taxes. Kline Engineering_=part 1: firm valuation 1. What is the value of the unlevered firm? Unlevered firm value Vu \$ 2. When the perpetual bonds is issued, what is the benefit of raising the debt, quantified by PV of interest tax shield? PV of interest tax shield $ 3. What is the value of the levered firm? Levered firm value VI$