Marpor Industries had no debt and expects to generate free cash flows of $16 million each year. Marpor believes that if it permanently increases its level of debt to $40 million, the risk of financial distress may cause it to lose some customers and receive less favourable terms from its suppliers. As a result, Marpor's expected free cash flows with debt will be only $15 million per year,. Suppose, Marpor tax rate is 30%, the risk free rate is 5%, the expected return of the market is 15%, and the beta of Marpor's free cash flows is 1.10 (with or without leverage): Required a) Estimate Marpor's value with or without leverage. b) Estimate Marpor's value with the new leverage.