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Square Files assets are worth $280. It has $170 of zero-coupon debt outstanding that is due to be repaid at the end of two years.
Square Files assets are worth $280. It has $170 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 Files assets is 40% per year. Calculate the present value of the companys debt and equity.
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