"The Alto Horns Corp. is planning on introducing a new line of clarinets. They expected EBIT is $800,000. The unlevered cost of equity is 15%. The firm plans to raise $1,000,000 as 10% interest perpetual debt. Assume depreciation, net working capital, and investment cash flows are 0. The corporate tax rate is 25%. Which of the following represents the correct annual cash flows to be used under the FTE method?"

A.

490000

B.

640000

C.

420000

D.

600000

E.

525000