Firm ABCs projected cash flows are as follows

Year	1	2	3	4 and 4+
CF	3,000	5,000	8,000	Grow at g = 1% forever

We can choose one of the following two capital structure plans:

	Debt	Equity
Plan A	20%	80%
Plan B	50%	50%
Plan C	70%	30%

The cost of debt are as follows

	Debt	Cost of debt
Plan A	20%	risk-free rate + 0.5%
Plan B	50%	risk-free rate + 1%
Plan C	70%	risk-free rate + 3%

The firms unlevered beta is 0.8, tax rate is 40%. Market return is 9%.

To calculate risk-free rate, we have the following information.

The 10-year Treasury bond with par value $100, annual coupon rate 3.125%, 10-year to maturity, is selling at $90.

What is the highest possible firm value?

	a	117,613.91
	b	121,494.40
	c	139,027.85
	d	129,035.03