What are the market values of the firms equity

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Assignment: Valuing equity and debts using B-S model Sunburn Sunscreen has a zero coupon bond issue outstanding with a $10,000 face value that matures in one year. The current market value of the firm's assets is $10,600. The standard deviation of the return on the firm's assets is 32 percent per year, and the annual risk-free rate is 7 percent per year, compounded continuously. What are the market values of the firm's equity and debt based on the Black-Scholes model?

Use risk-free bond - put option" to find out the value of debt. Second method Only handwritten submission is accepted.

Reference no: EM133432228

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