page 2 Question 1 Nectar Inc. has a 10-year, zero coupon bond with a face value of $30 million. The firm's assets have a market value of $100 million. The volatility of asset returns is 0.2, and the continuously compounded risk-free rate is 2%. a) Calculate the value of Nectar's equity b) Calculate Nectar's cost of debt (4+3=7 marks)