1. KTR corporation will acquire an asset that will generate a Free Cash Flow for the Firm equal to $4 million in year 1, growing by 5% a year thereafter. The acquisition will be financed by issuing $100 million of debt. KTRs corporate tax rate is 25%. The key thing is that KTR will keep a CONSTANT INTEREST COVERAGE RATIO k. KTRs unlevered cost of equity amounts to 10% and its debt cost of capital amounts to 4%. Using the Target Interest Coverage concept from APV, calculate the Unlevered and the Levered Values of KTRs acquisition.

   	a.	$80 million and $160 million
   	b.	$120 million and $140 million
   	c.	$80 million and $100 million
   	d.	$67.3 million and $115.7 million