Jensen Boat Works Is an All Equity Firm That Has

Multiple Choice

Jensen Boat Works is an all equity firm that has 340,000 shares of stock outstanding. The company is in the process of borrowing $4 million at 8% interest to repurchase 80,000 shares of the outstanding stock. What is the value of this firm if you ignore taxes?

A) $15.8 million
B) $16.4 million
C) $17.0 million
D) $17.5 million
E) $18.1 million