Bavarian Brew Bavarian Brew, an Unlevered Firm, Has an Expected EBIT of EBIT

Multiple Choice

Bavarian Brew
Bavarian Brew, an unlevered firm, has an expected EBIT of $500,000. The required return on assets for the firm's assets is 10%. The company has 250,000 shares outstanding. The company is considering raising $1 million in debt with a required return of 6% and would use the proceeds to repurchase outstanding stock.
-What is the value of Bavarian Brew after the restructuring, if the PV of bankruptcy cost is $750,000? Assume a corporate tax rate of 34%.

A) $5,000,000
B) $5,340,000
C) $4,590,000
D) $4,250,000