A local firm has debt worth $200,000, with a yield of 11%, and equity worth $300,000. It is growing at a 6% rate, and its tax rate is 40%. A similar firm with no debt has a cost of equity of 15%. Under the MM extension with growth, what is the value of your firm's tax shield, i.e., how much value does the use of debt add?

		$97,778
		$102,857
		$113,143
		$124,457
		$136,903 Show the calculations