MM with Corporate Taxes Firms U and Lare identical in every respect. The information for firms U and L 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.(S) 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 rs for Firm L? (5 points) c. Find Si, and then show that SL +D = V results in the same value as obtained in Part a. (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. Vu VE million million b ISL SL SL+D million million + d WACCU WACCL 1 Debt U L 0 $ 20.00 million 0 10.0% 15.0% 15.0% $ 5.00 $ 5.00 million 40% 40% rsu EBIT Tax rate Debt re U L 0 $ 20.00 million 0 10.0 15.0% 15.0% $5.00 S 5.00 million ON EBIT Tax rate 4ON MM with Corporate Teses firms and are identical in every resped. The information for firms and to the right Assume that (1) All of the MM assumptions are met. Both firms are subject to the same federal plus state corporate tax rate. He is the same for both him.(5) The unlevered cost of equity is is the same for both firms a. Whet value would MM now estimate for each firm. (Hint: Use Proposition points) b. What is ry for Kim?(point 5. Finds, and then show that 8.0results in the same values obtained in Porta. (5 point 6. What is the WACC for Firm U? for Firm 17(10 points) Please show work and answer questions completely to receive full credit. 54 11 29 v M million million 22 13 24 b re 25 26 C si 5.D million million as ad WACCU WAcci 11 11