Rackin Pinion Corporations assets are currently worth $1,190. In one year, they will be worth either $1,150 or $1,440. The risk-free interest rate is 4 percent. Suppose the company has an outstanding debt issue with a face value of $1,000.

a.	What is the value of the equity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

b-1.	What is the value of the debt? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

b-2.	What is the interest rate on the debt? (Do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e.g., 32.)

c.	Would the value of the equity go up or down if the risk-free rate were 4 percent?

• Increase

• Decrease