question no 10.4 10.4 Prabhu Limited has a current value of 10,000. The face value of its
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question no 10.4
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10.4 Prabhu Limited has a current value of 10,000. The face value of its outstanding bonds (the only debt on its balance sheet) is 8000. These are 1year discount bonds with an obligation of 8000 in year 1. The risk-free interest rate is 12.7 percent and the vari- ance of the continuously compounded rate of return on the firm's assets is 25 percent. What is the present value of Prabhu Limited's equity, So, and debt Bo?
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