You Have Collected the Following Information for Your Firm

You have collected the following information for your firm: Your firm is contemplating increasing its debt by $100 million and using the funds to repurchase $100 million in equity. The debt would be perpetual and would have a perpetual
Expected return of 8.5%. The firm's current marginal tax is also expected to be permanent.
What will this change do to the value of the firm?

A) It will decrease firm value by $20 million.
B) It will increase firm value by 35 million.
C) It will increase firm value by $140 million.
D) It will decrease firm value by about $12 million.