3. Suppose RIR Ltd expects an EBIT of $25,600 every year forever. The firm currently has no debt, and its cost equity is 8.5 percent, and the tax rate is 35 percent.
   • i. If the firm can borrow at 5 percent. What will the value of the firm be if the firm takes on debt equal to 60 percent of its unlevered value?

• ii. Using M&M Proposition I, what will the value of the firm be if the firm takes on debt equal to 40 percent of its levered value?