Company NothingOrAll (NOA) is known to be undertaking a new project. If the project is successful the value of the firm's debt and equity in a year will be $50 million, if it is unsuccessful the firm's value will be $32 million. NOA has a zero bond issue outstanding, which is due in one year with face value $38 million. The risk-free interest rate is 0.07. NOA's current value of debt and equity is $40 million. NOA pays no dividends. 1. Make use of the binomial option pricing model to value the equity of NOA as a call option. What is NOA's value of debt (in million $)? 2. Suppose NOA has 50,000 shares of equity outstanding. What it the price per share of the firm's equity? 3. Compare the market value of NOA's debt with the present value of an equal amount of debt that is riskless with one year to maturity. What is the difference between riskless debt and risky debt (in million $)? 4. Assume that in place of the preceding project NOA's management decides to undertake a project that is even more risky. The value of the firm will either increase to $80 million or decrease to $20 million by the end of the year. Surprisingly, management concludes that the value of the firm today will remain at exactly $40 million if this risky project is substituted for the less risky one. What is the value of the firm's equity with this project (in million $)?