Exhibit 17.3
The total value (debt plus equity) of Wilson Dover Inc. is $500 million and the face value of its 1-year coupon debt is $200 million. The volatility (σ) of Wilson Dover's total value is 0.60, and the risk-free rate is 5%. Assume that N(d 1 ) = 0.9720 and N(d 2 ) = 0.9050.
-Refer to Exhibit 17.3.What is the value (in millions)of Wilson Dover's equity if it is viewed as an option?
A)$228.77
B)$254.19
C)$282.43
D)$313.81
E)$345.19

Question

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The Answer of Exhibit 17.3
The total value (debt plus equity) of Wilson Dover Inc. is $500 million and the face value of its 1-year coupon debt is $200 million. The volatility (σ) of Wilson Dover's total value is 0.60, and the risk-free rate is 5%. Assume that N(d 1 ) = 0.9720 and N(d 2 ) = 0.9050.
-Refer to Exhibit 17.3.What is the value (in millions)of Wilson Dover's equity if it is viewed as an option?
A)$228.77
B)$254.19
C)$282.43
D)$313.81
E)$345.19

Exhibit 17.3 The Total Value (Debt Plus Equity) of Wilson Dover Inc