ABC Inc. is considering adding leverage to its capital structure. ABCs managers believe they can add as much as $ 35 million in debt and exploit the benefits of the tax shield (for which they estimate T=15%). However, they also recognize that higher debt increases the risk of financial distress. What is the optimal debt choice for ABC? Based on the simulations of the firms future cash flows, the CFO has made the following estimates (in millions of dollars):

Debt ( million $)	0	10	20	25	30	35
PV ( interest tax shield)	0.00	1.50	3.00	3.75	4.50	5.25
PV( financial distress cost)	0.00	0.00	0.38	1.62	4.00	6.38