Frostbite thermalwear has a zero coupon bond issue, Ask an Expert

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Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of S30,000 that matures in one year. The current market value of the firm's assets is $36,400. The standard deviation of the return on the firm's assets is 53 percent per year, and the annual risk-free rate is 5 percent per year, compounded continuously. Based on the Black-Scholes model, what is the market value of the firm's equity and debt? What is the firm's continuously compounded cost of debt'?

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Financial Management, Finance

Category:- Financial Management
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