Question
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Problem 17-18 Equity as an Option Sunburn Sunscreen has a zero coupon bond issue outstanding with...
Problem 17-18 Equity as an Option
Sunburn Sunscreen has a zero coupon bond issue outstanding with a $10,000 face value that matures in one year. The current market value of the firm’s assets is $11,900. The standard deviation of the return on the firm’s assets is 28 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 firm’s equity and debt? (Do not round intermediate calculations and round your final answers to 2 decimal places (e.g., 32.16).)
Market value Equity $
Market value Debt $
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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