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79. The assets of Uptown Stores are currently worth $284,000. These assets are expected to...

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Accounting

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79. The assets of Uptown Stores are currently worth $284,000. These assets are expected to be worth either $275,000 or S300,000 one year from now. The company has a pure discount bond outstanding with a $280,000 face value and a maturity date of one year. The risk-free rate is 4.1 percent. What is the value of the equity in this firm? A. S9,915 B. S15,865 C, $12,507 D. $21,347 E. $24.015 AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Analyze Difficulty: Basic Leaming Objective: 24-04 How to valuc a firms equity as an option on the firms assets. Section: 24 5 Equity as a Call Option on the Firm's Assets Topic: Equity and options 80

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