The Following Information Has Been Presented to You About the Gibson

The following information has been presented to you about the Gibson Corporation.

The company has no growth opportunities (g = 0) , so the company pays out all of its earnings as dividends (EPS = DPS) .The consultant believes that if the company moves to a capital structure financed with 20% debt and 80% equity (based on market values) that the cost of equity will increase to 11% and that the pre-tax cost of debt will be 10%.If the company makes this change, what would be the total market value (in millions) of the firm?

A) $3, 200
B) $3, 600
C) $4, 000
D) $4, 200
E) $4, 800