Company X is considering the question of whether it has any excess debt capacity. The firm has $$527$

million in the market value of debt outstanding and $$1\mathrm{.}76$ billion in the market value of equity. The

firm has earnings before interest and taxes of $$131$ million and faces a corporate tax rate of $21\%.$ The

company$$s bonds are rated BBB and the cost of debt is $8\%.$ At this rating, the firm has a probability

of default of $4\mathrm{.}3\%,$ and the cost of bankruptcy is expected to be $30\%$ of the firm value. Estimate the

unlevered value of the firm from the current market value of the firm.

a$)$ Below $$1\mathrm{.}70$ billion

b$)$ Between $$1\mathrm{.}70$ billion and $$1\mathrm{.}80$ billion

c$)$ Above $$1\mathrm{.}80$ billion