Consider a firm that is financed by both debt and equity. The firm is worth $1 million today and currently has 700 zero-coupon bonds outstanding that mature in six months. Each bond has a face value of $1,000. The firm pays no dividends. The annual variance of the firms continuously compounded asset returns is 0.16, and Treasury bills that mature in six months yield a continuously compounded interest rate of 8 percent per annum. Use the Black-Scholes model to calculate the individual values of the firms debt and equity.