4 Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $45,000 that matures in one year.

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4 Frostbite Thermalwear Has A Zero Coupon Bond Issue Outstanding With A Face Value Of 45 000 That Matures In One Year 1 (47.52 KiB) Viewed 35 times

4 Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $45,000 that matures in one year. The current market value of the firm's assets is $48,600. The standard deviation of the return on the firm's assets is 35 percent per year, and the annual risk-free rate is 6 percent per year, compounded continuously. 25 points 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.) 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.) eBook Print o References a. Equity Debt b. Cost of debt %