You are given the following information: EBIT (for firms L and U in perpetuity=$300,000; Corportate tax rate (T)=30%; cost of equity for firm U (Ksu or Rsu)=10%; cost of dept for firm L (Kd or Rd)=8%; level of dept for firm L (D)=$1,200,000.

What are the WACCs of Firms U and L, respectively, under M&M theory with Corporate taxes?

1. 10%(U), 8.10%(L)

2. 10%(U), 11.33%(L)

3.11.33%(U), 10.53%(L)

4. 10% (U), 8.53% (L)