Kirkland is currently an all-equity firm that has 40,000 shares outstanding with a market price of $40 a share. The current cost of equity is 11% and the tax rate is 30%. Kirkland is considering adding$1.8 million of debt with a coupon rate of 8% to her capital structure. The debt will be sold at par value. What is the levered value of the equity?
a. $220,000
b. $340,000
c. $640,000
d. $1,840,000