Robison $Co.is$ presently all$-$equity financed. The company $is$ assessing whether $to$ issue $R2$ million $in$ perpetual debt $at15\%$ interest and repurchase some $of$ its common stock $of$ the same amount. The firm has annoy $ofR1$ million and the cost $of$ equity $is20\%.$

$a.$ Calculate the value $of$ the ungeared firm, according $toMM$ without taxes.

$b.$ Calculate the resultant cost $of$ equity with gearing, according $to$ Modigliani and Miller with $no$ taxes.

$c.$ What $is$ the value $of$ the ungeared firm with a tax rate $of35\%?$

$d.$ What $is$ the value $of$ the geared firm with a tax rate $of35\%,$ according $toMM?$

$e.$ Suppose the tax rate was $45.$ Calculate the value $of$ the tax shield and the business.