An Unlevered Firm Has a Cost of Capital of 17

An unlevered firm has a cost of capital of 17.5 percent and earnings before interest and taxes of $327,500.A levered firm with the same operations and assets has both a book value and a face value of debt of $650,000 with a 7.5 percent annual coupon.The applicable tax rate is 38 percent.What is the value of the levered firm?

A) $1,397,212
B) $1,398,256
C) $1,402,509
D) $1,407,286
E) $1,414,414