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Sunburn Sunscreen has a zero coupon bond issue outstanding with $20,000 face value that matures in one year. The current market value of the firm’s assets is $20,900. The standard deviation of the return on the firm’s assets is 26% per year, and the annual risk-free rate is 6% per year, compounded continuously.

a) What is the market value of the firm’s equity and debt?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92100051

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