Question: 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
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 $10,600. The standard deviation of the return on the firm's assets is 32 percent per year, and the annual rikk-free rate is 7 percent per year, compounded continuously. What is the market value of the firm's debt based on the Black-Scholes model? (Round your answer to the nearest $100.) $6,400 $6,900 $8,600 $8,800 $9,200
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