A company is currently all equity, has a cost of equity of 9%, an EBIT of $1,500,000, and zero growth. The company has a corporate tax rate of 25% and investors are subject to a tax rate of 20% on earnings from equity investments and 35% on interest income.

If the company issues $7 million in debt, what is the gain from leverage assuming the assumptions of the Miller model hold?

Group of answer choices

461,538

615,385

692,308

538,462