Question: In a KMV model context a firm has a borrowing which falls due three months from now. On that date the firm is required to

In a KMV model context a firm has a borrowing which falls due three months from now. On that date the firm is required to repay $80 million in principal and interest. In addition there is a long-term debt of $20 million. The current market value of the assets is $100 million and the volatility of those assets is 10.0% p.a. CC. The growth rate of the assets is 5.0% p.a. CC. We can say that the best estimate of distance to default (for a one year horizon) is:

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