Schwarzentraub Corporation's expected free cash flow for the year is $550,000; in the future, free cash flow is expected to grow at a rate of 8%. The company currently has no debt, and its cost of equity is 12%. Its tax rate is 25%. Suppose the firm issues $7 million of debt at a rate of 9%. Use the compressed adjusted present value approach to answer the following questions. Do not round intermediate calculations.

Find V_U. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places.

$ million

Find V_L. Use the APV model that allows for growth. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places.

$ million

Find r_sL. Use the APV model that allows for growth. Round your answer to one decimal place.

%

Start with the value of the unlevered firm, V_U, from part a. Use the MM model (with taxes but with zero growth) to calculate V_L. (Hint: This answer will differ from that in part b due to differences in growth assumptions.) Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places.

$ million

Start with the value of the unlevered firm, V_U from part a. Use the MM model (with taxes but with zero growth) to calculate r_sL. (Hint: This answer will differ from that in part b due to differences in growth assumptions.) Round your answer to one decimal place.

%