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Fountain Corporation's economists estimate that a good business environment and a bad business environment are equally likely for the coming year. The managers of the

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Fountain Corporation's economists estimate that a good business environment and a bad business environment are equally likely for the coming year. The managers of the company must choose between two mutually exclusive projects. Assume that the project the company chooses will be the company's only activity and that the company will close one year from today. The company is obligated to make a $4,200 payment to bondholders at the end of the year. The projects have the same systematic risk but different volatility. Consider the following information pertaining to the two projects: Suppose bondholders are fully aware that stockholders might choose to maximize equity value rather than total company value and opt for the high-volatility project. To minimize this agency cost, the company's bondholders decide to use a bond covenant to stipulate that the bondholders can demand a higher payment if the company chooses to take on the highvolatility project. What payment to bondholders would make stockholders indifferent between the two projects? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Hint 1: In order to make stockholders indifferent between the low-volatility project and the highvolatility project, the bondholders will need to raise their required debt payment so that the expected value of equity if the high-volatility project is undertaken is equal to the expected value of equity if the low-volatility project is undertaken. Hint 2: Hint 1 is all the hint and help you get for this question, which means "technical support via email or otherwise" is not available. Do your best, and I will explain this question via a video (will be posted on Canvas) after the the due date

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