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Sunburn Sunscreen has a zero coupon bond issue outstanding with a $20,000 face value that matures in one year. The current market value of the
Sunburn Sunscreen has a zero coupon bond issue outstanding with a $20,000 face value that matures in one year. The current market value of the firms assets is $22,300. The standard deviation of the return on the firms assets is 42 percent per year, and the annual risk-free rate is 4 percent per year, compounded continuously. |
Based on the BlackScholes model, what is the market value of the firms equity and debt? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
Market value | |
Equity | $ |
Debt | $ |
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