Question $11$

Perez & Perez $($P&P$),$ based in a country currently without any taxes, has an annual operating income $($EBIT$)$ of $63$ million in

perpetuity. The company is currently $100$ percent equity financed and, based on its current capital structure, its shareholders have a

required rate of return of $12$ percent. $P$&$P$ is considering issuing million in debt and using the proceeds to repurchase common

shares. The debt will be issued at par and will have an $8\mathrm{.}0$ percent coupon. If the country implements a $30$ percent corporate tax

rate and Modigliani and Miller's Propositions I and II with taxes apply, the value of the firm before the debt issuance and share

repurchase is closest to: