Henderson's Is an All-Equity Firm That Has 135,000 Shares of Stock

Multiple Choice

Henderson's is an all-equity firm that has 135,000 shares of stock outstanding. Neal, the financial vice-president, is considering borrowing $220,000 at 7.25 percent interest to repurchase 20,000 shares. Ignoring taxes, what is the value of the firm?

A) $1,260,000
B) $1,400,000
C) $1,485,000
D) $1,620,000
E) $1,750,000