A. Fethe Inc. is a custom manufacturer of guitars, mandolins, and other stringed instruments and is located near Knoxville, Tennessee. Fethe's current value of operations, which is also its value of debt plus equity, is estimated to be $7 million. Fethe has $3 million face value, zero coupon debt that is due in 2 years. The risk-free rate is 4%, and the standard deviation of returns for companies similar to Fethe is 40%. Fethe's owners view their equity investment as an option and would like to know the value of their investment.

Excel attachment can be found on the google drives link below.

https://drive.google.com/file/d/1GWlt4HErkxiZn3OOTl6tyY-bE3IsLtt3/view?usp=sharing