Firm ABC has debt with a face value of $40m (which could be considered to be the exercise price on call and put options on the firm). The standard deviation of assets is =0.2. The risk-free rate is currently 4.5% and a time to expiration of 30 years is sufficiently long to use for option valuation. The market value of the firm is $80m. a. Find the market value of debt and equity using the Black-Scholes Option Pricing Model. b. If the firm decides to increase the volatility of its assets to =.3 by investing in riskier assets, what will happen to the market values of debt and equity? Find the new values