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 80.0% debt would cause the cost of equity to increase from 10.0% to 12.0%, and the interest rate on the new debt would be 9.0%. What would the firm's total market value be if it makes this change? Hints: Find the FCF, which is equal to NOPAT = EBIT(1 - T) because no new operating capital is needed, and then divide by (WACC - g). Do not round your intermediate calculations.

Oper. income (EBIT)	$800		Tax rate	40.0%
New cost of equity (rs)	12.00%		New wd	80.0%
Interest rate (rd)	9.00%

a. $5,357

b. $8,000

c. $7,357

d. $7,143

e. $5,929