Martha B's Has Total Assets of $1,810

question 42

Multiple Choice

Martha B's has total assets of $1,810.These assets are expected to increase in value to either $1,900 or $2,400 by next year.The company has a pure discount bond outstanding with a face value of $2,000.This bond matures in one year.Currently,U.S.Treasury bills are yielding 5.5 percent.What is the value of the equity in this firm?

• A)$6.98
• B)$7.24
• C)$6.67
• D)$7.08
• E)$7.89