Question: Please help with the following: Problem 22-23 Equity as an Option Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of

Please help with the following:

Please help with the following: Problem 22-23 Equity as an Option Frostbite

Problem 22-23 Equity as an Option Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $36,000 that matures in one year. The current market value of the firm's assets is $40,400. The standard deviation of the return on the firm's assets is 46 percent per year, and the annual risk-free rate is 6 percent per year, compounded continuously a. Based on the Black-Scholes model, what is the market value of the firm's equity and debt? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Market value Equity Debt b. What is the firm's continuously compounded cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of debt

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