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Summer Corp. has a zero-coupon bond issue outstanding with a $10,000 face value that matures in one year. The current market value of the firms
Summer Corp. has a zero-coupon bond issue outstanding with a $10,000 face value that matures in one year. The current market value of the firms assets is $10,900. The standard deviation of the return on the firms assets is 31% per year, and the risk-free rate is 6% per year, compounded continuously. Based on the Black-Scholes model, what is the market value of the firms equity and debt?
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