Young Publishing is an all-equity firm with an EBIT of $800 million and a tax rate of 40%. The company has no growth opportunities (g = 0), so the company pays out all of its earnings as dividends. A consultant believes that if the company moves to a capital structure financed with 20% debt and 80% equity (based on market values), then the cost of equity will increase to 11% and the pre-tax cost of debt will be 10%. If the company makes this change, what would be the total market value of the firm?

$4,800 million.

$3,600 million.

$3,200 million.

$4,200 million.