Summer Sunglasses has debt in the form of zero coupon bonds with a face value of $25,000 which is due in one year Today's value of Summer Sunglasses ' assets is $26,100 Summer Sunglasses ' assets return standard deviation is 41 percent per year The annual Treasury bill, or risk free, rate is 5 percent, compounded continuously Winter Boots has debt in the form of zero coupon bonds with a face value of $37,000 which is due in one year Today's value of Winter Boots ' assets is $40,400 Winter Boots ' assets return standard deviation is 44 percent per year Now, let's say, these two companies, Summer Sunglasses and Winter Boots have decided to merge The seasonality of the two companies' sales revenues creates the diversification effect As a result, the newly created firms (Winter Sunglasses Summer Boots) assets return standard deviation is only 21 percent per year a 1 Calculate the sum of market values of equity of Summer Sunglasses and Winter Boots (Do not round intermediate calculations and round your answer to 2 decimal places, e g , 32 16 ) a 2 Calculate the sum of market values of debt of Summer Sunglasses and Winter Boots (Do not round intermediate calculations and round your answer to 2 decimal places, e g , 32 16 ) b 1 Calculate the market value of equity of the newly created Winter Sunglasses Summer Boots (Do not round intermediate calculations and round your answer to 2 decimal places, e g , 32 16 ) b 2 Calculate the market value of debt of the newly created Winter Sunglasses Summer Boots (Do not round intermediate calculations and round your answer to 2 decimal places, e g , 32 16 ) c 1 Calculate the gain or loss for stockholders as a result of this merger (A loss should be indicated by a minus sign Do not round intermediate calculations and round your answer to 2 decimal places, e g , 32 16 ) c 2 Calculate the gain or loss for bondholders as a result of this merger (A loss should be indicated by a minus sign Do not round intermediate calculations and round your answer to 2 decimal places, e g , 32 16 )

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Summer Sunglasses has debt in the form of zero-coupon bonds with a face value of $25,000 which is due in one year. Today's value of

"Summer Sunglasses" has debt in the form of zero-coupon bonds with a face value of $25,000 which is due in one year. Today's value of "Summer Sunglasses" ' assets is $26,100. "Summer Sunglasses" ' assets return standard deviation is 41 percent per year.

The annual Treasury-bill, or risk-free, rate is 5 percent, compounded continuously.

"Winter Boots" has debt in the form of zero-coupon bonds with a face value of $37,000 which is due in one year. Today's value of "Winter Boots" ' assets is $40,400. "Winter Boots" ' assets return standard deviation is 44 percent per year.

Now, let's say, these two companies, Summer Sunglasses and Winter Boots have decided to merge. The seasonality of the two companies' sales revenues creates the diversification effect. As a result, the newly created firms (Winter Sunglasses & Summer Boots) assets return standard deviation is only 21 percent per year.

a-1.	Calculate the sum of market values of equity of "Summer Sunglasses" and "Winter Boots". (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
a-2.	Calculate the sum of market values of debt of "Summer Sunglasses" and "Winter Boots". (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b-1.	Calculate the market value of equity of the newly created "Winter Sunglasses & Summer Boots". (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b-2.	Calculate the market value of debt of the newly created "Winter Sunglasses & Summer Boots". (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c-1.	Calculate the gain or loss for stockholders as a result of this merger. (A loss should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c-2.	Calculate the gain or loss for bondholders as a result of this merger. (A loss should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)