Question: help pleaseeeee!!! D) Silver plc, a construction company financed by both debt and equity, is considering a project. If the project succeeds, the value of

help pleaseeeee!!! D) Silver plc, a construction company financed by both

help pleaseeeee!!!

D) Silver plc, a construction company financed by both debt and equity, is considering a project. If the project succeeds, the value of the company in one year's time will be 25m. If the project fails, the value of the company will only be worth 16m. The current value of Silver plc is 20m which takes into account the new project. The company has an outstanding zero-coupon bond maturing in one year's time with a face value of 19m. The company pays no dividend and a UK gilt maturing in a year has a yield of 5%. Derive the values of Silver plc's equity. (HINT VALUE OF EQUITY-VALUE OF CALL)

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