Sunburn Sunscreen has a zero coupon bond issue outstanding with a face value of $$25,00,$ that matures in one year. The current market value of the firm's assets is $$27,200.$ The standard deviation of the return on the firm's assets is $33$ percent per year, and the annual risk$-$free rate is $4$ percent per year, compounded continuously.

Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $$50,000$ that matures in one year. The current market value of the firm's assets is $$53,600.$ The standard deviation of the return on the firm's assets is $38$ percent per year.

Suppose Sunburn Sunscreen and Frostbite Thermalwear have decided to merge. Because the two companies have seasonal sales, the combined firm's return on assets will have a standard deviation of $18$ percent per year.

a$-1.$ What is the combine value of equity in the two existing companies?

a$-2.$ What is the combine value of debt in the two existing companies?

b$-1.$ What is the value of the new firm's equity?

b$-2.$ What is the value of the new firm's debt?

c$-1.$ What was the fain or loss for shareholders?

c$-2.$ What was the gain or loss for bondholders?