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Sunburn Sunscreen has a zero coupon bond issue outstanding with a $30,000 face value that matures in one year. The current market value of the
Sunburn Sunscreen has a zero coupon bond issue outstanding with a $30,000 face value that matures in one year. The current market value of the firms assets is $31,800. The standard deviation of the return on the firms assets is 36 percent per year, and the annual risk-free rate is 4 percent 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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