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TransMotors Inc. currently has a required return on its assets/unlevered WACC of 12.0%. It plans to borrow $3,000,000 at an interest rate of 6.0%. It

TransMotors Inc. currently has a required return on its assets/unlevered WACC of 12.0%. It plans to borrow $3,000,000 at an interest rate of 6.0%. It has EBIT of $2,000,000 and a tax rate of 25.0%. Using the MM Proposition with taxes what is the value of the company before it borrows the $3,000,000 and the levered value of the total company (not the equity) after it borrows the $3,000,000?

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