The current value of a ﬁrm is $1,400. The ﬁrm has $1,000 in pure discount debt due in one year and the risk-free rate is 6%. The ﬁrm's assets will be worth either $1,200 or $1,500 in one year. What is
The current value of the ﬁrm's equity?
A) $318
B) $421
C) $457
D) $943
E) $1,400

Question

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The Answer of The current value of a ﬁrm is $1,400. The ﬁrm has $1,000 in pure discount debt due in one year and the risk-free rate is 6%. The ﬁrm's assets will be worth either $1,200 or $1,500 in one year. What is
The current value of the ﬁrm's equity?
A) $318
B) $421
C) $457
D) $943
E) $1,400

The Current Value of a ﬁRm Is $1,400