The Fruit Mart Is an All-Equity Firm with a Current

The Fruit Mart is an all-equity firm with a current cost of equity of 19.6 percent.The estimated earnings before interest and taxes are $315,000 annually forever.Currently,the firm has no debt but is in the process of borrowing $400,000 at 9.5 percent interest.The tax rate is 33 percent.What is the value of the unlevered firm?

A) $849,207
B) $853,571
C) $856,411
D) $1,019,307
E) $1,076,786