Question 8 (1.5 points)

You have the following data on a call option: t = 0.85 years; S0 = $ 90; K = $ 90; r = 5% per year; = 3% per year. (NB: For d1 and d2, round to two digits after the decimal point, to the nearest even number, before using the normal distribution table available on CLIC).

Question 8 options:

$ 3.992378

$ 5.238510

$ 2,770,412

$ 4,115,202

$ 3.729425

Question 9 (0.75 points)

A company has $ 950,000 of perpetual bonds outstanding. Its tax rate is 30%. Calculate the debt tax benefit according to Miller (1977), if investors are taxed 8% on bond income and 5% on equity income.

Question 9 options:

$ 263,315.2174

$ 269,474,637

$ 300,000,000

$ 277,173,913

$ 291,032,608