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21. Equity as an Option Sunburn Sunscreen has a zero coupon bond issue outstanding with a $10,000 fa ...

21. Equity as an Option Sunburn Sunscreen has a zero coupon bond issue outstanding with a $10,000 face value that malures in one year. The current market value of the firm's assets is $11,200. The standard deviation of the return on the firm's assets is 38 percent per year and the annual risk-free rate is 5 percent per year, compounded continuously. Based on the Black-Scholes model, what is the market value of the firm's equity and debt?

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