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 percent debt and 80 percent equity (based on market values) that the cost of equity will increase to 11 percent and that the pre-tax cost of debt will be 10 percent.

If the company makes this change, what would be the total market value of the firm? (The answers are in millions.)

$3,200

$3,600

$4,000

$4,200

$4,800