A Firm Is Currently Financed with 40% Equity and 60

Multiple Choice

A firm is currently financed with 40% equity and 60% debt.The firm generates perpetual earnings after taxes and interest payments of $2 million per year.The firm's cost of equity is 12%,its cost of debt is 5%,and it has a tax rate of 40%.What is the value of the levered firm?

A) $2 million
B) $30.3 million
C) $25.6 million
D) $46.7 million
E) $10 million