Answer the following questions (a) A financial analyst collects a US public-traded companies' financial information as below (in $1000 units): Sales 12050 Earnings before interest and tax 3559 Retained earnings 2662 Market value of equity 63272 Total Debts 9042 Total assets 28848 Working capital 6660 Required: Is the business safe or not in your opinion? (Hint: Use a formula from your lecture notes.) (2 marks) (b) Discuss how the volatility of the value of assets impacts the probability of default. (Hint: Employ what you learned from the Merton (1974) model. The model is given below.) (4 marks) In (V/X) + (- 8 - 2) T\ Pr.def = N A VT Answer the following questions (a) A financial analyst collects a US public-traded companies' financial information as below (in $1000 units): Sales 12050 Earnings before interest and tax 3559 Retained earnings 2662 Market value of equity 63272 Total Debts 9042 Total assets 28848 Working capital 6660 Required: Is the business safe or not in your opinion? (Hint: Use a formula from your lecture notes.) (2 marks) (b) Discuss how the volatility of the value of assets impacts the probability of default. (Hint: Employ what you learned from the Merton (1974) model. The model is given below.) (4 marks) In (V/X) + (- 8 - 2) T\ Pr.def = N A VT