Question: Sunburn Sunscreen has a zero coupon bond issue outstanding with a $25,000 face value that matures in one year. The current market value of the

Sunburn Sunscreen has a zero coupon bond issue outstanding with a $25,000 face value that matures in one year. The current market value of the firms assets is $26,100. The standard deviation of the return on the firms assets is 41 percent per year, and the annual risk-free rate is 5 percent per year, compounded continuously.

Based on the BlackScholes model, what is the market value of the firms equity and debt?

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