Premier Health System is just about to launch operations of a new oncology center.The oncology center will have book assets of $10 million, and it expects to earn a 16percent return on these assets before taxes (EBIT = 14% x $10 million). The corporate tax rate is 40%.Management is trying to decide how to raise the required $10 million. It is knownthat the required rate of return for an all-equity firm in this business is 11 percentthat is, R(Reu) = 11%. Further, Premier can borrow at a rate of R(Rd) = 6%.

1. According to MM with taxes, what will be the value of Premier if it uses no debt? If it uses $6million of 6 percent debt? If it uses $10 million of 6 percent debt?

Use Excel in presenting the answers for your work.Be sure to show calculations (using cell formulas is suggested).