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Footware has a zero coupon bond issue outstanding with a face value of $40,000 that matures in one year. The current market value of the
Footware has a zero coupon bond issue outstanding with a face value of $40,000 that matures in one year. The current market value of the firm's assets is $60.500. The standard deviation of the retum on the firm's assets is 53 percent per year, and the annual risk-free rate is 5 percent per year, compounded continuously. Required 1) What is the market value of the firm's equity using the Black-Scholes model? (3 marks) 2) What is the market value of the firm's debt
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