What is the value of the debt and the equity, Corporate Finance

A firm's assets have a market value of $500m; the asset returns have a standard deviation of 25% per year. 

The firm is financed with zero coupon debt having a face value of $400m and maturing in 5 years. The (continuously compounded) risk free rate is 5%.

What is the value of the debt and the equity? 

 

Posted Date: 4/5/2013 5:26:10 AM | Location : United States







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