Bombay Company's book and market value balance sheets are as follows:

(NWC = net working capital; LTA = long term assets; D= debt; E= equity; V= firm value):

According to MM's Proposition I corrected for taxes, what will be the change in company value if Bombay issues $200 of equity and uses it to make a permanent reduction in the company's debt? Assume a 35 percent marginal corporate tax rate.

A. +$140

B. +$70

C. $0

D.$70