Question: Sunburn Sunscreen has a zero coupon bond issue outstanding with a $ 1 0 , 0 0 0 face value that matures in one year.

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 $10,700.
The standard deviation of the return on the firm's assets is 39 percent per year, and the
annual risk-free rate is 7 percent per year, compounded continuously.
Based on the Black-Scholes model, what is the market value of the firm's equity?
Based on the Black-Scholes model, what is the market value of the firm's debt?
Sunburn Sunscreen has a zero coupon bond issue outstanding with a

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