Problem 17-7 MM with Corporate Taxes Companies U and L are identical in every respect except that U is unlevered while L has $8 million of 7% bonds outstanding. Assume that (1) all of the MM assumptions are met, 2 both firms are subject to a 35% federal plus state corporate tax rate, 3 E Tss2 million and 4 the unievered cost of equity S 3% a. What value would MM now estimate for each firm? Enter your answers in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to two decimal places. (Hint: Use Proposition I.) Company U million Company L* million b. What is rs for Firm U? Round your answer to one decimal place. What is rs for Firm L? Do not round intermediate calculations. Round your answer to one decimal place. c. Find SL, and then show that SL+D-VL results in the same value as obtained in part a. Enter your answers in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Do not round intermediate calculations. Round your answers to two decimal places million SL + D = $ million d. What is the WACC for Firm U? Do not round intermediate calculations. Round your answer to two decimal places. What is the WACC for Firm L? Do not round intermediate calculations. Round your answer to two decimal places