Question $8$

Corp. MA and Corp. MB are two identical firms except for their capital structure. MA is an

unleveled $($all$$equity$)$ firm while MB has a perpetual debt of $$$B$$ with an interest rate of rB$.$

Both companies have annual EBIT of $X$,$ and face a corporate tax rate of tc$.$ The Value of Corp.

MA is VA; the Value of Corp. MB is VB$.$ Suppose rBB