Assume there is a corporate income tax of 21% (i.e., Tc = 21%) and interest payments are deductible by corporations. All other perfect capital market assumptions used in Chapter 17 still apply. If there were no corporate income taxes, an unlevered firm would have a market value of $10,000. However, after considering the income tax payments at the 21% tax rate, the value of the unlevered firm is only $7,900. Assume that this firm wants to issue permanent perpetual risk-free, 5% interest rate, debt and use the proceeds of the debt issue to repurchase an equal amount of its stock. The firm will be able to fully deduct the interest payments at the 21% tax rate each year in perpetuity. Each dollar of the debt issue should increase the value of the firm by:

A. $1

B. $1 * 0.05 = $0.05

C. $1 * 0.21 = $0.21

D. $1 *0.21 * 0.05 = $0.0105