A football club currently playing in the Premiership has been valued at 500 million. If the club remains in the Premiership, then this valuation is expected to increase by 6% each year, while relegation would result in a decline of 10% per year. The probability that the club will avoid relegation has been estimated at around 50%. The club has borrowed a sum of 350 million from the banks. Given its cash flow situation, the club has arranged not to pay interest on the debt, but has agreed instead to pay the banks a total of 435 million at the end of two years. The annual risk-free interest rate is 3%. Calculate the value of the shareholders equity, and the resulting value of the debt held by the banks. Briefly discuss the reliability of these estimates. [60%]

Can you do this question? Its equity as a call and multi period binomial option pricing model?

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Using the Binomial Multi Period Option Pricing model I have found the call option value to be $170.9M which I assume is the shareholders equity. However, I do not understand the rest of the question;