Your firm is considering issuing one-year debt, and has come up with the following estimates of the value of the interest tax shield and the probability of distress for different levels of debt: Suppose the firm has a beta of zero, so that the appropriate discount rate for financial distress costs is the risk-free rate of 5 %. Which level of debt above is optimal if, in the event of distress, the firm will have distress costs equal to

a. $33 million?

b. $77 million?

c. $2525 million?

Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Debt Level (in $ million) 60 40 PV (interest tax shield, $ million 0.00 0.76 0.951.14 1.33 .52 .71 0% 80 90 70 50 1% Probability of Financial Distress 0% 2% 7% 16% 31% Print Done a. $3 million? If distress costs are equal to $3 million, the optimal level of debt is $million. (Round to the nearest integer.) b. $7 million? If distress costs are equal to $7 million, the optimal level of debt in this case is S million. (Round to the nearest integer.) c. $25 million? If distress costs are equal to $25 million, the optimal level of debt in this case is $million. (Round to the nearest integer.)