mm with corporate taxes companies u and l are identical in every respect except that u is unlevered while l has $10 million of 5% bonds outstanding. assume: (1)all of the mm assumptions are met. (2)both firms are subject to a 25% federal-plus-state corporate tax rate. (3)ebit is $2 million. (4)the unlevered cost of equity is 10%. what value would mm now estimate for each firm? (hint: use proposition i.)
