A company has a single zero coupon bond outstanding that matures in five years with a face value of $36 million. The current value of the companys assets is $26 million, and the standard deviation of the return on the firms assets is 42 percent per year. The risk-free rate is 5 percent per year, compounded continuously.

a.	What is the current market value of the companys equity?

b.What is the current market value of the companys debt?

c.	What is the companys continuously compounded cost of debt?

d.	The company has a new project available. The project has an NPV of $2,500,000. If the company undertakes the project, what will be the new market value of equity? Assume volatility is unchanged.

e.	Assuming the company undertakes the new project and does not borrow any additional funds, what is the new continuously compounded cost of debt?