Buckeye Industries has a bond issue with a face value of $1,000 that is coming due in one year. The value of Buckeyes assets is currently $1,090. Jim Tressell, the CEO, believes that the assets in the firm will be worth either $920 or $1,380 in a year. The going rate on one-year T-bills is 4.8 percent.

a-1	What is the value of Buckeyes equity (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Value of equity

$

a-2	What is the value of the debt? (Do not round intermediate calculations. Round the final answer to 2 decimal places)

Value of debt

$

Suppose Buckeye can reconfigure its existing assets in such a way that the value in a year will be $800 or $1,600.

b.	If the current value of the assets is unchanged, what is the new value of the company's equity? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Value of equity

$