Fountain Corporations 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 companys 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:

Economy	Probability	Low-Volatility Project Payoff	High-Volatility Project Payoff
Bad	.50	$ 4,200	$ 3,600
Good	.50	4,750	5,350

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 high-volatility project.

What payment to bondholders would make stockholders indifferent between the two projects?