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What is the value of the equity for company

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Reference no: EM132939351

Problem 1: A company has a zero coupon bond issue with a face value of $2 million that matures in one year. The assets of the firm are currently valued at $3.2 million, but this amount is expected to either decrease to $2.5 million or increase to $3.8 million in a year's time. Assume the risk-free rate is 7%. What is the value of the equity? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your response. For example, an answer of $1,000.50 should be entered as 1000.50.)

Reference no: EM132939351

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