Sunburn Sunscreen has a zero coupon bond issue outstanding with a $25,000 face value that matures in one year. The current market value of the firm's assets is $27,200. The standard deviation of the return on the firm's assts is 35% per year, and the annual risk-free rate is 5% per year, compounded continuously. Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $31,000 that matures in one year. The current market value of the firm's assets is $34,000. The standard deviation of the return on the firm's assets is 39% per year. Suppose Sunburn Suncreen and Frostbite Thermalwear have decided to merge. Because the two companies have seasonal sales, the combined firm's return on assets will have a standard deviation of 21% per year. Based on the Black Scholes model, what is the market value of the firms equity and debt? *Round all answers to 2 decimal places AND show work please.

A-1: What is the combined value of equity in the two existing companies? EQUITY $________

A-2: What is the combined value of debt in the two existing companies? DEBT $__________

B-1: What is the value of the new firm's equity? EQUITY $__________

B-2: What is the value of the new firm's debt? DEBT $____________

C-1: What was the gain or loss for shareholders? GAIN/LOSS $___________

C-2: What was the gain or loss for bondholders? GAIN/LOSS $___________