market value

(Concept Problem) A company has assets with a market value of $100. It has one outstanding bond nissue, a zero coupon bond maturing in two years with a face value of $75. The risk-free rate is 5 percent. The volatility of the asset is 0.30. Determine the market value of the equity and the continuously compounded yield on the bond. (Use the spreadsheet BSMbin8e.xls for calculations.)