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Homework: Debt Policy Assignment 0 Saved Here are book and marketvalue balance sheets of the United Frypan Company (figures in $ millions): Boo keValue Balance Sheet 375 Net working capital 5 35 Debt 5 4-0 points Long-term assets 65 Equity 60 5 130 s 130 Elk MarketValue Balance Sheet e 00 Net working capital 5 35 Debt 5 40 Long-term assets 1'30 Equity 185 f! 5 225 5 225 Print Assume that MM's theory holds except for taxes. There is no growth, and the $40 of debt is expected to be permanent. Assume a 21% corporate tax rate. a. How much of the rm's market value is accounted for by the debt-generated tax shield? (Enter your answer in million rounded to 2 decimal places.) b. What is United Frypan's after-tax WACC if rDebt = 6.9% and Equity = 161%? [Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places! c. Now suppose that Congress passes a law that eliminates the deductibility of interest for tax purposes after a grace period of 5 years. What will be the new value of the rm, other things equal? Assume a borrowing rate of 6.9%. [Do not round intermediate calculations. Enter your answer in million rounded to 2 decimal places.) .1. PV lax shield b. WACC c. New value of the rm million million