Q7. (6 marks) Kamloops Manufacturing has an expected EBIT of $67,000 in perpetuity and a tax rate of 35%. The firm has $139,000 in outstanding debt at an interest rate of 6.85%, and its unlevered cost of capital is 10.25%. What is the value of the firm according the 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? Please explain. 4