Prescott Inc. has the following data regarding its financial structure:

Market value of outstanding debt:	$7,000,000
Value of firm if financed with all equity:	$18,850,000
Number of shares outstanding:	350,000
Current price per share:	$38.00
Tax rate:	30 %

What is the decrease in firm value due to expected bankruptcy costs?

A) $650,000

B) $5,550,000

C) $2,100,000

D) $1,000,000