Hanover Tech is currently an all equity firm that has 320,000 shares of stock outstanding with amarket price of $19 a share. The current cost of equity is 15.4%and the tax rate is 34%. The firm is considering adding $1.2 million of debt with a coupon rate of 8%to itscapital structure. The debt will be sold at par value. What is the levered value of the equity?

******Answer is $5,288,000 if you could explain why when computing you multiple the debt (1.2M) by the tax rate instead of the coupon rate that'd be great.