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Answer MUST: Calculate using excel formulas/ functions. Please answer with the functions/formulas listed below B D E F G no Higgs Bassoon Corporation is a

Answer MUST: Calculate using excel formulas/ functions. Please answer with the functions/formulas listed below

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B D E F G no Higgs Bassoon Corporation is a custom manufacturer of bassoons and other wind instruments. Its current value of operations, which is also its value of debt plus equity, is estimated to be $200 million. Higgs has $110 million face value, zero coupon debt that is due in 3 years. The risk-free rate is 5%, and the standard deviation of returns for similar companies is 60%. The owners of Higgs Bassoon view their equity investment as an option and would like to know the value of their investment. 12 a. Using the Black-Scholes Option Pricing Model, how much is the equity worth? 14 Black-Scholes Option Pricing Model 15 Total Value of Firm 200 million this is the current value of operations 16 Face Value of Debt 110 million 17 Risk Free rate 5% 18 Maturity of debt (years) 3 years 19 Standard Dev. 60.00 this is sigma--also known as volatility 20 d use the formula from the text 21 d use the formula from the text 22 N(d) use the Normsdist function in the function wizard 23 N(d2) 24 Call Price = Equity Value million 26 b. How much is the debt worth today? What is its yield? million 28 Debt value = Total Value - Equity Value = 29 Debt yield = 30

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