20)

Cool Refreshments has bonds outstanding with a face value of $140,000 that are selling at par. It also has 15,000 shares of stock outstanding that are selling for $19.80 a share. The all-equity value of the firm is $395,000. The tax rate is 34 percent. What is the value of the financial distress costs? Assume there are no other claims on the firm.

$5,600

$4,800

$6,200

$5,100

$6,500