Companies D and L are idenitcal in every aspect exect that D is unlevereged while L has 15 million and 6% bonds outstanding . Assume that all the MM assumptions are met, both firms are subject to a40% federal plus state corporate tax rate , that EBIT is 10 million and cost of equity of D is 10%
1. What value would mm estimate for each firm
2. What is the required return on equity for L
3. What is the wacc