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a firms assets have a market value of 500m the

A firm's assets have a market value of $500m; the asset returns have a standard deviation of 25% per year.

The firm is financed with zero coupon debt having a face value of $400m and maturing in 5 years. The (continuously compounded) risk free rate is 5%.

What is the value of the debt and the equity?

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Corporate Finance: a firms assets have a market value of 500m the

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