22Radio Hut is an all-equity firm. Analysts expect Radio Hut to generate free cash flow of $4M at the end of the current year and they expect those cash flows to grow at 1.25% in perpetuity. Radio Hut has 4 million shares outstanding, which trade for $20 per share, and stockholders require a return of 5.5%. The tax rate is 35%. The Radio Hut CFO is considering a recapitalization. It will borrow (at a rate of 5%) and use the borrowed funds to repurchase shares. It targets a capital structure with a debt-to-value ratio of 40%. After the recapitalization, the value of the firm is expected to be $109.7 million. What is the implied present value of tax shields?

A)$10.4M

B)$15.6M

C)$45.3M

D)$68.4M

E)$94.1M