BNT has an enterprise value of $90m. The company borrows a $60m permanent debt is subject to a tax rate of 30%. Assume the assumptions of the trade-off theory hold. If the unlevered value of BNT is $80m, calculate the present value of the financial distress cost.

Select one:

a.

$8m

b.

$10m

c.

$18m

d.

$90m

e.

$12m