The Piano Movers Can Borrow at 7

The Piano Movers can borrow at 7.8 percent.The firm currently has no debt, and the cost of equity is 15 percent.The current value of the firm is $680,000.What will the value be if the firm borrows $140,000 and uses the proceeds to repurchase shares? The corporate tax rate is 35 percent.

A) $820,000
B) $540,000
C) $750,000
D) $571,000
E) $729,000