The Assets of Blue Light Specials Are Currently Worth $2,100

The assets of Blue Light Specials are currently worth $2,100. These assets are expected to be worth either $1,800 or $2,300 one year from now. The company has a pure discount bond outstanding with a $2,000 face value and a maturity date of one year. The risk-free rate is 5%. What is the value of the equity in this firm?

A) $166.67
B) $231.42
C) $385.71
D) $405.00
E) $714.29