Business, 11.12.2019 19:31 chaleea74

Rackin pinion corporation’s assets are currently worth $1,080. in one year, they will be worth either $1,040 or $1,330. the risk-free interest rate is 3 percent. suppose the company has an outstanding debt issue with a face value of $1,000.
a. what is the value of the equity? (do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)
b-1. what is the value of the debt? (do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)
b-2. what is the interest rate on the debt? (do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e. g., 32.)
c. would the value of the equity go up or down if the risk-free rate were 5 percent? increase

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Rackin pinion corporation’s assets are currently worth $1,080. in one year, they will be worth eithe...