debt is riskless. a. What is the initial amount of debt? ratio. c. Calculate the percentage change in the value of outstanding debt once the firm adjusts to its target debt-equity ratio. d. What does this imply about the riskiness of the firm's tax shields. Explain. a. What is the initial amount of debt? (Select the best choice below.) A. Initially the firm's debt is $2.554 million, and the equity is $4.154 million. B. Initially the firm's debt is $0.854 million, and the equity is $2.846 million. C. Initially the firm's debt is $2.554 million, and the equity is $2.846 million. D. Initially the firm's debt is $0.854 million, and the equity is $1.615 million