Use the information below to answer the following question.
S&C Co. has a zero coupon bond issue outstanding with a face value of $20,000 that matures in one year. The current market value of the firm's assets is $23,000. The standard deviation of the return on the firm's assets is 52 percent per year, and the annual risk-free rate is 6 percent per year, compounded continuously. What is the firm's continuously compounded cost of debt?
A) 11.24 percent
B) 20.32 percent
C) 16.48 percent
D) 18.69 percent
E) 17.09 percent

Question

Use the information below to answer the following question. 
S&C Co. has a zero coupon bond issue outstanding with a face value of $20,000 that matures in one year. The current market value of the firm's assets is $23,000. The standard deviation of the return on the firm's assets is 52 percent per year, and the annual risk-free rate is 6 percent per year, compounded continuously. What is the firm's continuously compounded cost of debt?
A) 11.24 percent 
B) 20.32 percent 
C) 16.48 percent 
D) 18.69 percent 
E) 17.09 percent

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The Answer of Use the information below to answer the following question. 
S&C Co. has a zero coupon bond issue outstanding with a face value of $20,000 that matures in one year. The current market value of the firm's assets is $23,000. The standard deviation of the return on the firm's assets is 52 percent per year, and the annual risk-free rate is 6 percent per year, compounded continuously. What is the firm's continuously compounded cost of debt?
A) 11.24 percent 
B) 20.32 percent 
C) 16.48 percent 
D) 18.69 percent 
E) 17.09 percent

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