Question: 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

page 2 Question 1 Nectar Inc. has a 10-year, zero coupon bond

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)

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