Bavarian Brewhouse is an unlevered firm with a current cost of equity of 10% and 250,000 shares outstanding. The company is considering a proposal that involves issuing $1 million in debt and using all the proceeds to repurchase outstanding stock. The debt would have an interest rate of 6%. If the firm has expected annual EBIT of $1,500,000 per year and a tax rate of 35%, what will be the total value of the firm after taking on the proposed level of leverage? Except for taxes, assume that markets are perfect (no bankruptcy, etc.).

	a	$10,000,000
	b	$975,000
	c	$10,100,000
	d	$15,000,000