Elk Electronics has bonds outstanding with a market value of $3,085,000. It also has 180,000 shares of stock outstanding that are selling for $43.25 per share. The all-equity value of the firm is $11,400,000. The tax rate is 21 percent. By what amount has the value of the firm been decreased by the expected bankruptcy costs? Assume there are no other claims on the firm.

Elk Electronics has bonds outstanding with a market value of $3,085,000. It also has 180,000 shares of stock outstanding that are selling for $43.25 per share. The all-equity value of the firm is $11,400,000. The tax rate is 21 percent. By what amount has the value of the firm been decreased by the expected bankruptcy costs? Assume there are no other claims on the firm. Multiple Choice $12,047,850 $1,177,850 $530,000 $10,870,000 $8,315,000