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A company has a single zero-coupon bond outstanding which matures in 10 years with a face value of $50 million. The current value of the

A company has a single zero-coupon bond outstanding which matures in 10 years with a face value of $50 million. The current value of the companys assets is $42 million, and the standard deviation of the return on the firms assets is 35% per year. The risk-free rate is 4% per year, compounded continuously. a. What is the current market value of the companys equity? (10 points). b. What is the current market value of the companys debt? (2 points). c. What is the companys effective cost of debt? (3 points).

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