Sunburn sunscreen has a zero coupon bond issue outstanding, Ask an Expert

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Sunburn Sunscreen has a zero coupon bond issue outstanding with a face value of $27,000 that matures in one year. The current market value of the firm’s assets is $28,500. The standard deviation of the return on the firm’s assets is 39 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?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92878694

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