Southside Systems has $60 million of outstanding debt with a 7% required rate of return. Southside has a required return on assets of 13%, an EBIT of $45 million, and corporate tax rate of 21%.

a. Calculate Southsides present value of the interest tax shields and total firm value.

b. Calculate Southsides gain from leverage if there are personal taxes of 20% on stock income and 30% on debt income.