Chapter 21, Problem 5P

a)

Summary Introduction

To determine: The value of MM estimates now for each firm.

b)

Summary Introduction

To determine: ${\text{r}}_{\text{s}}$ for firm L and firm U.

c)

Summary Introduction

To determine: ${\text{S}}_{\text{L}}$ and show ${\text{S}}_{\text{L}}+\text{D}={\text{V}}_{\text{L}}$.

d)

Summary Introduction

To determine: WACC for firm L and Firm U.