Cobalt Corp. has an unlevered value of $30 million and their…

Cobalt Corp. has an unlevered value of $30 million and their debt has a market value $25 million. Their tax rate is 25 percent. Ignoring agency costs, what is value of the firm’s bankruptcy costs at this level of debt if the actual market value of the company is $29 million? (Hint: start with the M&M Propositions)