Calculate the value of backwoods debt and equity

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Reference no: EM13769176

The debt has a one-year maturity and a promised interest payment of 11%. Thus, the promised payment to Backwoods’s creditors is $1,132.2. The market value of the assets is $1,220 and the standard deviation of asset value is 47% per year. The risk-free interest rate is 11%. Calculate the value of Backwoods debt and equity. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

Debt=1020 Equity=1020 on book values

Reference no: EM13769176

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