RoTek Has a Capital Structure of $300,000 in Equity and $300,000

Multiple Choice

RoTek has a capital structure of $300,000 in equity and $300,000 in perpetual debt.The firm's cost of equity is 14 percent and its cost of debt is 9 percent.If the firm has an expected, perpetual net operating income of $120,000 and a marginal tax rate of 40 percent, what is the market value of RoTek? Assume all net income is paid out as dividends.

A) $698,571
B) $814,286
C) $818,571
D) $55,800