Rahman Co. has an expected EBIT of $120,000 in perpetuity and tax rate of 40%. The firm is paying 8.75% interest for $210,000 outstanding amount of debt. Unlevered cost of capital is 11.75%. a. Evaluate the firm using Modigliani and Miller approach (Case (II), Proposition (!) with taxes)? (4 marks) b. Find the equity value and D/E ratio? (1 mark) c. Under the Modigliani and Miller approach (Case II, Proposition I with taxes), explain how the firm can increase its value using the financial leverage? And explain the reason behind that? (2 marks)