Perpetuum Mobile Inc. is an all-equity firm that generates $6m in annual after-tax cash flows that are expected to remain constant forever. It's cost of capital is currently 11%. The firm is planning to borrow $15M and use the proceeds to buy back shares. The cost of debt is 8%. The debt will mature in 10 years after which the firm is expected to maintain zero-leverage capital structure. What is the new value of the firm if the tax rate is 30%? 2. "To finance its new project, Old Habits Inc. needs $5M that will be raised by issuing 6-year bonds. The interest rate on the bonds is 7% and the bonds will be issued at par. The flotation costs will be covered from the proceeds of the bond issue and are 2% of the gross proceeds. Find the NPV of flotation costs if the tax rate is 25%."