Start with the partial model in the file Ch26 P11 Build a Model.xls on the textbooks Web

Question:

Start with the partial model in the file Ch26 P11 Build a Model.xls on the textbook’s Web site. Rework Problem 26-10 using a spreadsheet model. After completing the problem as it appears, answer the following related questions.

a. Graph the cost of debt versus the face value of debt for values of the face value from $0.5 to $8 million.
b. Graph the values of debt and equity for volatilities from 0.10 to 0.90 when the face value of the debt is $2 million.
c. Repeat part b, but instead using a face value of debt of $5 million. What can you say about the difference between the graphs in part b and part c?

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Related Book For  book-img-for-question

Financial management theory and practice

ISBN: 978-1439078099

13th edition

Authors: Eugene F. Brigham and Michael C. Ehrhardt

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