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Square File's assets are worth $130. It has $95 of zero-coupon debt outstanding that is due to be repaid at the end of two years.
Square File's assets are worth $130. It has $95 of zero-coupon debt outstanding that is due to be repaid at the end of two years. The risk-free interest rate is 5%, and the standard deviation of the returns on Square File's assets is 40% per year.
Calculate the present value of the company's debt and equity. Do not round intermediate calculations. Round your answers to 2 decimal places.
Present value of the company's debt____________
Present value of the company's equity___________
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