Suppose that your firm's current unlevered value, V*, is $800,000, and its marginal corporate tax rate is 21 percent. Also, you model the firm's PV of financial distress as a function of its debt level according to the relation: PV of financial distress = 800,000 × (D/V*)². What is the firm's levered value if it issues $200,000 of perpetual debt to buy back stock? A)$792,000. B)$869,555. C)$920,000. D)$350,000.

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The Answer of Suppose that your firm's current unlevered value, V*, is $800,000, and its marginal corporate tax rate is 21 percent. Also, you model the firm's PV of financial distress as a function of its debt level according to the relation: PV of financial distress = 800,000 × (D/V*)². What is the firm's levered value if it issues $200,000 of perpetual debt to buy back stock? A)$792,000. B)$869,555. C)$920,000. D)$350,000.

Suppose That Your Firm's Current Unlevered Value, V*, Is $800,000