Modigliani and Miller suggest that the value of the firm is not affected by the firm's dividend policy, due to Select one: a. the clientele effect. b. the optimal capital structure. c. the informational content. d. the relevance of dividends. An unlevered firm has a cost of capital of 16 percent and earnings before interest and taxes of $225,000. A levered firm with the same operations and assets has both a book value and a face value of debt of $850,000 with an 8 percent annual coupon. The applicable tax rate is 34 percent. What is the value of the levered firm? Select one: a. $1,217,125 b. $1,178,125 c. $1,110,125 d. $928,125