MM Model with Corporate Taxes

An unlevered firm has a value of $$900$ million. An otherwise identical but levered firm has $$120$ million in debt at a $4\%$ interest rate, which is its pre$-$tax cost of debt. Its unlevered cost of equity is $10\%.$ No growth is expected. Assuming the federal$-$plus$-$state corporate tax rate is $25\%,$ use the MM model with corporate taxes to determine the value of the levered firm. Enter your answer in millions. For example, an answer of $$10,550,000$ should be entered as $10\mathrm{.}55.$ Round your answer to the nearest whole number.

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