Question $3,$ Part $($B$)$

$0\mathrm{.}0/18\mathrm{.}0$ points $($graded$)$

The market value of Company XYZ$\text{'}$s asset is currently $$15,000,000.$ The capital structure of $xYZ$ has two elements: debt with face value $$10,000,000,$ which matures one year from now, and common equity, with $100,000$ shares outstanding. Currently, the total market value of XYZ$\text{'}$s debt is $$9,000,000,$ and the market value of its equity is $$6,000,000.$

Consider a European call and a European put options on the stock of XYZ maturing a year from now. Assume that the stock of $xYZ$ pays no dividends during the life of the options, and the strike price of the options is $$50.$ Assume that a year from now the total value of assets of $xYZ$ can take only one of two values: $$5,000,000$ or $$25,000,000.$

What is the market value of the described call option today?

$

What is the market value of the described put option today?

$

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