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Bontron Belgian Fashions (BBF) is a clothing retailer with a current share price of $10

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Bontron Belgian Fashions (BBF) is a clothing retailer with a current share price of $10.00 and with 25 million shares outstanding.

Suppose that BBF plans to lower its corporate taxes by borrowing $100 million and using the proceeds to repurchase shares.

BBF pays corporate taxes of 40% and its shareholders expect the change in debt to be permanent.

The price of BBF's stock rises to $10.80 per share following the announcement.

What is the present value of BBF's financial distress costs?