An Unlevered Firm Currently Has a Value of $100 Million

Multiple Choice

An unlevered firm currently has a value of $100 million.The firm has a tax rate of 30%.The firm wishes to replace $50 million of its equity with $50 million of permanent debt.By increasing its leverage,the PV of the expected costs of financial distress would rise from 0 to $10 million.What is the value of the levered firm if it goes ahead with this plan?

A) $105 million
B) $115 million
C) $100 million
D) $125 million
E) $110 million