MM with Corporate Taxes Firms U and I are identical in every respect. The information for firms U and to the right. Assume that: (1) All of the MM assumptions are met. (2) Both firms are subject to the same federal-plus-state corporate tax rate. (3) EBIT is the same for both firms ($) The unlevered cost of equity, rsu is the same for both firms. a. What value would MM now estimate for each firm? (Hint: Use Proposition 1) (5 points) b. What is rst for Firm L? (5 points) c. Find St, and then show that SL +D = V results in the same value as obtained in Parta: (5 points) d. What is the WACC for Firm U? for Firm L? (10 points) Please show work and answer questions completely to receive full credit. a Vu VL million million Debt ro U L 0 $11.00 million 0 6.0% 12.0% 12.0% $ 2.10 $ 2.10 million 36% 36% b TSL rsu EBIT Tax rate SL SL+D million million d WACCU WACCL