A company's current value of assets is $300 million, and the volatility of the asset value is
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Question:
A company's current value of assets is $300 million, and the volatility of the asset value is 20% per annum. The future value of assets is log-normally distributed. The company has issued a debt whose face value is $240 million, and it needs to repay the debt in one year. The risk-free interest rate is 5% per annum.
What is the current value of the company's equity? Use the Black-Scholes-Merton model.
Group of answer choices
- $63.54 million
- $71.70 million
- $73.77 million
- $75.67 million
Related Book For
Advanced Accounting
ISBN: 9780132568968
11th Edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith
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