(10) Ever Corp. is currently unlevered. The firm has $960,000 in before-tax earnings and the unlevered asset beta is .8. The risk-free rate is 4% and the market risk premium is 7%. The firm plans to issue $4,000,000 in debt to repurchase stock. The perpetual bonds have a 5% return. The tax rate is 25%. The present value of financial distress costs is $120,000. The present value of agency costs is $220,000. Use the trade-off theory to estimate the value of the levered firm.