A company used to have zero debt and just issued $195,000$ of perpetual $9\%$ debt and used the proceeds to repurchase stock. The company expects to generate $83,000$ of EBIT in perpetuity. The company distributes all its earnings as dividends at the end of each year. The firm's unlevered cost of capital is $15\%$ and the tax rate is $40\%.$ What is the value of the levered firm after the repurchase?

PV of a perpetuity: $\frac{C}{r}$

MM Theorem $1$ with taxes: $V_L=V_U+T_{C}B$

$$420,000$

$$400,000$

$$390,000$

$$410,000$