MM with Corporate Taxes Companies U and L are identical in every respect except that U is unlevered while L has $8 million of 6% bonds outstanding. Assume: (1) All of the MM assumptions are met. (2) Both firms are subject to a 25% federal-plus-state corporate tax rate. (3) EBIT is $2 million. (4) The unlevered cost of equity is 12%. a. What value would MM now estimate for each firm? (Hint: Use Proposition I.) Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answers to two decimal places. Company U: $ Company L: $ 12.5 million 10 million b. What is rs for Firm U? For firm L? Do not round intermediate calculations. Round your answers to one decimal place. % Firm U: Firm L: c. Find SL, and then show that SL + D = VL results in the same value as obtained in Part a. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places. SL = $ million SL + D = $ million d. What is the WACC for Firm U? For Firm L? Do not round intermediate calculations. Round your answers to two decimal places. Firm U: % Firm L: % Check My Work (1 remaining)