Please help me to answer this question!

_l 3. (10 points) In 2005, Maytag (a producer of home appliances such as washing machines) was in financial trouble. Two companies were considering making a bid to purchase the finn. The rst was Whirlpool, Maytag's main competitor. The second was Wood, a private equity rm which planned to make Maytag a private company. In the past, Maytag had maintained a DN ratio of 42%, and had an equity beta of 1.24. IfWhirlpool acquired Maytag, they planned to maintain this same leverage ratio. In fact, Whirlpool's DN ratio was almost exactly 42% as well (however, they had a lower equity beta of 1.05, measured over the same time period). Meanwhile, 3,111};me acquired Maytag, they would increase leverage to DN = 65%. Both companies will use discounted cash ows with WACC discounting to evaluate the potential investment. a. Assume that both Whirlpool and Wplanned to keep Maytag's operations exactly as they had been run in the recent past. Thus, the operating cash flows generated by Maytag would be identical regardless of the acquirer. Finally, because of Wsll in managing finances, they assumed that the likelihood of Maytag encountering nancial distress again would be the same as it would be if Whirlme bought the company, even though Wwould use higher leverage than Whirlpool. Under these conditions, do you expect that Whirlpool or Wwouid estimate a higher total value of Maytag? Using the formula PV = 221 (13:51,, explain why you come to this conclusion