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You have the following information about the James E. Briley company. Sales $225,000 Operating Expenses $50,000 Depreciation $25,000 If the company borrows money, it will

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You have the following information about the James E. Briley company. Sales $225,000 Operating Expenses $50,000 Depreciation $25,000 If the company borrows money, it will borrow $50,000 at an interest rate of 11 percent, which is considered to be the risk free rate of interest. Thus, the total annual interest payments will be $5,500. When appropriate the corporate tax rate (Tc) is 34 percent, the personal taxi rate on income from bonds (Tpb) is 40 percent and the personal tax rate on income from stocks (Tps) is 28 percent. The cost of equity for the company is 14 percent. What is the gain from using debt in the capital structure if the firm is subject to pass-through taxation? O A. $6,000 B. -$6,000 C. $6,240 D. $0.00 E. $225,000

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