4. 16.

Equity as an option [LO 25.4] Sunburn Sunscreen has a zero coupon bond issue outstanding with a $15 000 face value that matures in one year. The current market value of the firm’s assets is $16 200. The standard deviation of the return on the firm’s assets is 34 per cent per year and the annual risk-free rate is 6 per cent per year, compounded continuously. Based on the Black–Scholes model, what is the market value of the firm’s equity and debt?