Simon Industries is expected to generate free cash flows of $12 million per year forever. Simon has a permanent debt of $80 million and a corporate tax rate of 40%. Simons unlevered cost of capital is 10%. If trade-off theory holds and we believe the firm value is $132m, the total present value of the financial distress cost is closest to:

Select one:

a.32m

b.20m

c.80m

d.172m

e.152m