The Bakery's Assets Are Currently Valued at $2,306

The Bakery's assets are currently valued at $2,306.These assets are expected to be worth either $2,100 or $2,600 one year from now.The company has a pure discount bond outstanding with a $2,500 face value and a maturity date of 1 year.The risk-free rate is 2.6 percent.What is the value of the equity in this firm?

A) $51.84
B) $31.42
C) $85.71
D) $105.15
E) $114.29

Correct Answer:

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