Please make use of the possible answers, not a single expert has gotten this correct $($i$.$e$.,$ providing answers that aren't listed as the possible answers$).$

Mr$.$ Schenk runs a franchise of laundry stores called Deep Clean Inc. $($DCI$).$ Currently DCI uses only equity capital. Mr$.$ Schenk was approached by representatives from Lenders Inc. who have pointed out to him that his cost of

unlevered equity capital is $15\%$ and the cost of debt capital is only $6\%.$ The reps said his company $($which produces before$-$tax operating cash flows of $$5$ million per year$)$ would benefit from using some debt. They recommend that he

issues $$12$ million worth of bonds and use the entire proceeds to repurchase $$12$ million worth of its own stocks.

Assume that both the firm's cash flows and the debt are perpetual, and DCI's marginal corporate tax rate is $30\%.$

a$)$ What is the current value of the firm without debt?

possible answers: $$3\mathrm{.}5,$ $$23\mathrm{.}3,$ $$58\mathrm{.}3,$ $$16\mathrm{.}3,$ $$26\mathrm{.}9,$ $$12\mathrm{.}0,$ $$33\mathrm{.}3,$ $$36\mathrm{.}5$

b$)$ If Mr$.$ Schenk follows Lenders Inc.$\text{'}$s plan:

i$.$ What would be the value of the firm?

possible answers: $$23\mathrm{.}3,$ $$26\mathrm{.}9,$ $$35\mathrm{.}3,$ $$38\mathrm{.}9,$ $$12\mathrm{.}0,$ $$13\mathrm{.}5,$ $$33\mathrm{.}3,$ $$36\mathrm{.}9$

ii$.$ What would be the cost of equity of the firm?

possible answers: $15\mathrm{.}0\%,13\mathrm{.}0\%,20\mathrm{.}1\%,24\mathrm{.}5\%,21\mathrm{.}7\%,18\mathrm{.}0\%,13\mathrm{.}5\%,10\mathrm{.}5\%$

c$)$ Now assume interest expenses were not tax deductible. If Mr$.$ Schenk still followed Lenders' advice to issue debt

and repurchase an equal amount of equity, even though interest expenses were not tax deductible:

i$.$ What would be the value of the firm?

possible answers: same as in a$),$ same as in b$)$ i$),$ unable to solve without a tax rate, none of the above

ii$.$ What would be the cost of equity of the firm?

possible answers: $15\mathrm{.}0\%,13\mathrm{.}0\%,20\mathrm{.}1\%,24\mathrm{.}5\%,21\mathrm{.}7\%,18\mathrm{.}0\%,13\mathrm{.}5\%,10\mathrm{.}5\%$