Flagstaff Enterprises is expected to have free cash flow in the coming year of $8 million, and this free cash flow is expected to grow at a rate of 3% per year thereafter. Flagstaff has an equity cost of capital of 13%, a debt cost of capital of 7%, and it is in the 35% corporate tax bracket.

If Flagstaff currently maintains a debt to equity ratio of 1, then the value of Flagstaff as a levered firm is closest to:

A.

$114 million

B.

$100 million

C.

$140 million

D.

$111 million