As a consultant to First Responder Inc., you have obtained the following data (dollars in millions). The company plans to pay out all of its earnings as dividends, hence g = 0. Also, no net new investment in operating capital is needed because growth is zero. The CFO believes that a move from zero debt to 15.0% debt would cause the cost of equity to increase from 10.0% to 13.0%, and the interest rate on the new debt would be 7.0%. What would the firm's total market value be if it makes this change? Do not round your intermediate calculations.

Oper. income (EBIT) $800

Tax rate 40.0%

New cost of equity (rs) 13.00%

New wd 15.0%

Interest rate (rd) 7.00%

a. $4,110

b. $3,986

c. $4,397

d. $3,740

e. $3,616