Question 1: Part A Same Firm but with $ 10 M of Debt Vy = S, +D=V2 If total value is $20 million and there is $ 10 million of debt, then the value of the levered firms' equity is debt to value ratio is__% and its debt to equity ratio is What is the Cost of Equity of firm L? Cost of Equity = Unlevered firm Cost of Equity + (unlevered cost of equity cost of debt) * Debt/Equity - Cost of Equity in Firm L = 10% + (10% - 6%) * _ =__ Higher than Before? WACC for firm L? - __%(_) + _% (_) = __ % Same as Before? Part B. Debt = $8 million In the M & M tax world, calculate the value of the unlevered firm (U) and the identical-risk levered firm (L). Corporate tax = 30%; perpetual EBIT for U and L = $3 million; cost of capital of U = 16%; L's outstanding Debt = $8 million; pre-tax cost of debt = 8%. What is the WACC of L