MM Extension with Growth Schwarzentraub Industries' expected free cash flow for the year is $450,000; in the future free cash flow is expected to grow at a rate of 10%. The company currently has no debt, and its cost of equity is 14%. Its tax rate is 40%. (Hint: Use equations and .)

A)

Find VU. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.

$ ______million

Find VL if Schwarzentraub uses $7 million in debt with a cost of 9%. Use the APV model that allows for growth. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ ________million

Find rsL. Round your answer to one decimal place. rsL =________ %

Based on VU from part a, find VL using the MM model (with taxes) if Schwarzentraub uses $7 million in 9% debt. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ ______million

Find rsL. Round your answer to one decimal place. rsL = ______%

Explain the difference between your answers to parts b and c. The input in the box below will not be graded, but may be reviewed and considered by your instructor.