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table [ [ A ] , [ Rackin Pinion Corporation's assets are currently worth $ 1 , 0 3 0 . ] , [

\table[[A],[Rackin Pinion Corporation's assets are currently worth $1,030.],[In one year, they will be worth either $1,000 or $1,270. The],[risk-free interest rate is 3.7 percent. Suppose the company has],[an outstanding debt issue with a face value of $1,000.],[a. What is the value of the equity?],[b. What is the value of the debt? The interest rate on the debt?],[Input Area:],[Asset value],[Asset value in 1 year],[Asset value in 1 year],[Risk-free rate],[Debt face value],[(Use cells A6 to B10 from the given information to complete this question.)],[Output Area:],[Equity value],[Debt value],[Interest rate]]
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