Question
Sunburn Sunscreen has a zero coupon bond issue outstanding with a $21,000 face value that matures in one year. The current market value of the
Sunburn Sunscreen has a zero coupon bond issue outstanding with a $21,000 face value that matures in one year. The current market value of the firms assets is $22,800. The standard deviation of the return on the firms assets is 26 percent per year, and the annual risk-free rate is 5 percent per year, compounded continuously.
Based on the BlackScholes model, what is the market value of the firms equity and debt?(Do not round intermediate calculations and round your final answers to 2 decimal places (e.g., 32.16).)
Market value
Equity$_________
Debt$___________
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