You are the manager of an unlevered firm whose market value is $5,800,000. You are considering issuing $1,250,000 in debt and using these funds to purchase an equal amount of equity. The corporate tax rate is 21%, and the stock holders and bond holders face personal tax rates of 0% and 34% respectively. Use the Miller (1977) Model to estimate the value of the equity of the relevered firm.

• $5,800,000

• $2,805,538

• $5,553,788

• $4,550,000

• $4,303,788