Nivea Inc. is a cosmetics firm that is examining its financing policy for possible changes. The firm has 10 -year bonds outstanding with a face value of $30 million and interest expense of $1.5 million a year; the firm is rated BB and the default spread for BB rate bonds is 4%. There are 2 million shares trading at $10 a share and current beta for the firm is 2.80. The risk-free rate is 5% and the market risk premium is 4%. The corporate tax rate for the firm is 40%. a) Estimate the market value of outstanding debt at the firm today. b) Estimate the current cost of capital for the firm