Question: Corp. has a zero coupon bond issue outstanding with a face value of $15,000 that matures in one year. The current market value of the

Corp. has a zero coupon bond issue outstanding with a face value of $15,000 that matures in one year. The current market value of the firm's assets is $16,900. The standard deviation of the return on the firm's assets is 53 percent per year and the annual risk-free rate is 5 percent per year, compounded continuously. Based on the Black-Scholes model, what is the market value of the firm's debt?

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