The following is the information for Last Chance Productions. The firm has a market value of assets of $10 million and a debt repayment amount of $40 million with maturity of 6 years. Clearly, this firm is highly leveraged. The standard deviation of asset returns for the firm is 30% and the risk-free rate in the economy is 1%.

The firm is considering two projects. Project LoRise adds $3.75 million to the market value of the company. Further, taking the project does not raise the risk of the firm. Project LongShot has an NPV of -$2.0 million and it contributes to firm risk. Specifically, taking on Project LongShot increases the standard deviation of assets to 60%.

19) If Last Chance Productions were to up Project LongShot its market value of equity would be _______ million.

A) $1.611

B) $8

C) $0

D) $0.623

E) None of the above