The Decatur Corporation (DC) has a zero-coupon bond issue with a face value of $5,000 that is coming due in one year. The value of DC's assets is currently $5,500. Christian Archer, the omnipotent CEO, believes that the assets in the firm will be worth $6,000 or $3,200 in a year. The risk-free rate is 4% per annum. Assume there are no taxes. The equity value of the firm can be modeled as a call option on the firms assets where the exercise price for the option is equal to the debt payment promised. Use a one-period binomial option pricing model to find the current value of the firms equity? What then is the current value of the debt? Bradley Daniels, the CFO, argues that DC can reconfigure its existing assets such that the value in a year will be either $6,500 or $2,700. If the current value of the assets remains unchanged, would the stockholders favor such a move? Explain why or why not?