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1) Shire PLC has a zero-coupon bond issue outstanding with a 12 billion face value that matures in five years. The current market value of
1) Shire PLC has a zero-coupon bond issue outstanding with a 12 billion face value that matures in five years. The current market value of the firm's assets is 20 billion. The standard deviation of the return on the firm's assets is 23% per year, and the annual risk-free rate is 3% per year, compounded continuously. Based on the Black-Scholes model, what is the market value of the firms equity and debt?
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