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A corporation has a zero - coupon bond issue with a face value of $ 2 8 , 0 0 0 that matures in one
A corporation has a zerocoupon bond issue with a face value of $ that matures in one year.The firm's assets have a current market value of $ The return on the firm's assets has a standard deviation of per year, while the annual riskfree rate is per year, compounded continuously. Based on the BlackScholes model: What is the market value of the corporation's equity? Showcalculations and the final answer for each of the following:ddNdNdmarket value of the equity What is the market value of the corporation's debt? What is the firm's continuously compounded debt cost?
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