Question 4 ABC is an all equity firm. Its market value of equity is $10 million. ABC decides to issue $2 million debt and keeps the same amount of debt in perpetuity. Assume a perfect capital market except for the presence of corporate tax. The tax rate is 30%. 4.1 What's the market value of equity after the debt issuance? [ 3 marks] 4.2 Explain the two facts that help you calculate the market value of equity. In other words, why do you choose this particular formula when answering 4.1 ? [ 3 marks]