A consultant has collected the following information regarding Young Publishing:

Total assets	$3,000 million	Tax rate	40%
Operating income (EBIT)	$ 800 million	Debt ratio	0%
Interest expense	$ 0 million	WACC	10%
Net income	$ 480 million	M/B ratio	1.00
Share price	$32.00	EPS = DPS	$3.20

The company has no growth opportunities (g = 0), so the company pays out all of its earnings as dividends (EPS = DPS). The consultant believes that if the company moves to a capital structure financed with 20% debt and 80% equity (based on market values) that the cost of equity will increase to 11% and that the pre-tax cost of debt will be 10%. If the company makes this change, what would be the total market value (in millions) of the firm?

Answer

		$3,200
		$3,600
		$4,000
		$4,200
		$4,800