Question 58 of 60 As a consultant to First Responder Inc., you have obtained the following data (dollars in millions). The company plans to pay out all of its earnings as dividends, hence g -0. Also, no net new investment in operating capital is needed because growth is zero. The CFO believes that a move from zero debt to 70.0% debt would cause the cost of equity to increase from 10.0% to 13.0%, and the interest rate on the new debt would be 9.0%. What would the firm's total market value be if it makes this change? Hints: Find the FCF, which is equal to NOPAT - EBIT(1 - T) because no new operating capital is needed, and then divide by (WACC - 8). Do not round your intermediate calculations. Tax rate $860 13.0096 9.00% 25.0% 70.09 Oper. Income (EBIT) New cost of equity (5) Interest rate (ra) a. $7,478 million New Wd b. $9,971 million c. $6.324 million d. $8.431 million e. $6.992 million