Q$.9$ Tool Manufacturing has an expected EBIT of $$57,000$ in perpetuity and a tax rate of $21$

percent. The firm has $$134,000$ in outstanding debt at an interest rate of $5\mathrm{.}35$ percent, and its

unlevered cost of capital is $10\mathrm{.}3$ percent. What is the value of the firm according to M&M

Proposition I with taxes? Should the company change its debt$-$equity ratio if the goal is to

maximize the value of the firm? Explain.