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Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $23,000 that matures in one year. The current market value of
Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $23,000 that matures in one year. The current market value of the firm's assets is $27,000. The standard deviation of the return on the firm's assets is 50 percent per year, and the annual risk-free rate is 5 percent per year, compounded continuously. Based on the Black-Scholes model, what is the market value of the firm's equity? Based on the Black-Scholes model, what is the market value of the firm's debt? Debt What is the firm's continuously compounded cost of debt
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