Gartner Systems has no debt and an equity cost of capital of 10.9 %. Gartner's current market capitalization is $ 97 million, and its free cash flows are expected to grow at 2.7 % per year. Gartner's corporate tax rate is 33 %. Investors pay tax rates of 37 % on interest income and 22 % on equity income.a. Suppose Gartner adds $ 49 million in permanent debt and uses the proceeds to repurchase shares. What will Gartner's levered value be in this case? b. Suppose instead Gartner decides to maintain a 50 % debt-to-value ratio going forward. If Gartner's debt cost of capital is 7.44 %, what will Gartner's levered value be in this case?

Hint:

Make sure to round all intermediate calculations to at least four decimal places.