The CFO of Mousetrap, Ms. Harried is analyzing the effects of a switch from the current unlevered position (no debt) to a levered firm (with debt), using the Miller-Modigliani (MM) framework. Last...

The CFO of Mousetrap, Ms. Harried is analyzing the effects of a switch from the current unlevered position (no debt) to a levered firm (with debt), using the Miller-Modigliani (MM) framework. Last night, a bandicoot (a large, tropical marsupial omnivore in the order Peramelemorphia) scurried into the finance department at Mouse-trap, Inc., and chewed up a good part of her analysis. Help Ms. Harried fill in the missing numbers in the following table. Assume that Mousetrap Inc. fulfils all the assumptionsunderlying the MM propositions.

Extracted text: Assumptions Risk free rate Expected return on market Corporate tax rate 4% 9% 50 % Calculations Without With leverage leverage ЕBIT 7200 7200 Interest ЕВТ 7200 Taxes 3600 Net Income 3600 Firm value 40,000 Debt Equity ? Cost of debt 4 % Cost of equity ? ? WACC Beta of debt ? Beta of equity 1.60