MV Pfd Corporation has debt with a coupon rate of 5% and a yield to maturity of 7%, a cost of equity of 15% and a cost of preferred stock of 10%. Its debt has a market value of $130 million and a book value of $150 million. The common equity has a book value of $80 million and the preferred stock has a book value of $60 million. The preferred stock is currently trading at a 25% premium over its book value per share, while the common stock trades at $20 per share, with 8 million shares outstanding. The tax rate is 30%.

What is this firms value of debt, D (for use in the weights)?

A.

$140 million

B.

$15 million

C.

$150 million

D.

$60 million

E.

$75 million

F.

$130 million

G.

$160 million

H.

$180 million

I.

$80 million