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 20.0% 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 8.0%. What would the firm's

total market value be if it makes this change? Hints: Find the FF, 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

25.0%

New cost of equity (rs)

12.00%

New Wa

20.0%

Interest rate (Ia)

8.00%