Simpson's Is an All-Equity Firm That Has 400,000 Shares of Stock

Multiple Choice

Simpson's is an all-equity firm that has 400,000 shares of stock outstanding.The company is in the process of borrowing $1.5 million at 5 percent interest to repurchase 30,000 of the firm's outstanding shares.Ignore taxes.What will be the market value of equity after the repurchase?

A) $20.0 million
B) $19.2 million
C) $18.5 million
D) $19.8 million
E) $18.9 million