Please Answer step by step with formula and clear explanation! thank you!!

You have been asked to analyze the value of equity in a company that has the following features:

**The earnings before interest and taxes is $25 million, and the corporate tax rate is 40%.

**The earnings are expected to grow 4% a year in perpetuity, and the return on capital is 10%. The cost of capital of comparable firms is 9%.

**The firm has two types of debt outstanding-two-year zero coupon bonds with a face value of $250 million and bank debt with 10 years to

maturity with a face value of $250 million. (The duration of this debt is four years.)

**The firm is in two businesses--food processing and auto repair. The average standard deviation in firm value for firms in food processing is 25%, whereas

the standard deviation for firms in auto repair is 40%. The correlation between the businesses is 0.5.

**The riskless rate is 7%.

Use the option pricing model to value equity as an option.