Assume that the delta of a call option on a firm's assets is .876.This means that a $50,000 project will increase the value of equity by:

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The delta of a call option represents the sensitivity of the option's price to a $1 change in the price of the underlying asset. Here, a delta of 0.876 means that for every $1 increase in the firm's asset value, the equity value increases by $0.876. Therefore, a $50,000 increase in asset value will increase the equity value by $50,000 * 0.876 = $43,800.

Assume That the Delta of a Call Option on a Firm's