Excel Online Structured Activity: Equity Viewed as an Option A. Fethe Inc. is a custom manufactures of guitars, mandolins, and other stanged instruments and is located near Knoxville, Tennessee, Fethe's current value o operations, which is also its value of debt plus equity, is estimated to be $8 million, Fethe has $4 million face value, sero coupon debt that a due in 2 years. The risk free rate is 4%, and the standard deviation of returns for companies similar to Fother is SS. Fethe's owners view their equity investment as an option and would like to know the value of their investment The data has been collected in the Microsolt Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below Open spreadsheet a. Using the Black Scholes option pricing model, how much is Fethe's equity worth? Enter your answer in millions for example, an answer of $1.21 million should be entered as 1.21, not 1,210,000. Do not round intermediate calculations. Round your answer to two decimal places $ million b. How much is the debt worth today? Enter your answer in milions. For example, an answer of $1.21 million should be entered as 1.21, no 1,210,000. Do not round intermediate calculations. Round your answer to two decimal places $ million What is its yield? Do not round intermediate calculations. Round your answer to one decir al place How would the equity value change if Fethe's managers could use risk management techniques to reduce its volatility to 30%7Enter your answerin millions. For Open spreadsheet a. Using the Black Scholes option pricing model, how much is Fethe's equity worth? Enter your answer in milies. For example, an answer of $1.21 million should be entered as 1.21, not 1,210,000. Do not round intermediate calculations. Round your answer to two decimal places million b. How much is the debt worth today? Enter your answer in milions. For example, an answer of $1.21 million should be entered as 1.21, not 1,210,000. Do not round intermediate calculations. Round your answer to two decimal places, $ $ million What is its yield? Do not found intermediate calculations, Round your answer to one decimal place How would the equity value change of Fathe's managers could use risk management techniques to reduce its volatility to 90%. Enter your answer i milions for example, an answer of $1.21 million should be entered as 1.21, not 1,210,000. Do not round intermediate calculations, Round your mower to two decimal places New equity value $ million How would the yield on the debt change if Fethe's managers could use risk management techniques to reduce its volatility to 30%? Do not round intermediate calculations, Round your answer to one decimal place New yield on the debt: Check My Work Reset Problem Excel Online Structured Activity: Equity Viewed as an Option A. Fethe Inc. is a custom manufactures of guitars, mandolins, and other stanged instruments and is located near Knoxville, Tennessee, Fethe's current value o operations, which is also its value of debt plus equity, is estimated to be $8 million, Fethe has $4 million face value, sero coupon debt that a due in 2 years. The risk free rate is 4%, and the standard deviation of returns for companies similar to Fother is SS. Fethe's owners view their equity investment as an option and would like to know the value of their investment The data has been collected in the Microsolt Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below Open spreadsheet a. Using the Black Scholes option pricing model, how much is Fethe's equity worth? Enter your answer in millions for example, an answer of $1.21 million should be entered as 1.21, not 1,210,000. Do not round intermediate calculations. Round your answer to two decimal places $ million b. How much is the debt worth today? Enter your answer in milions. For example, an answer of $1.21 million should be entered as 1.21, no 1,210,000. Do not round intermediate calculations. Round your answer to two decimal places $ million What is its yield? Do not round intermediate calculations. Round your answer to one decir al place How would the equity value change if Fethe's managers could use risk management techniques to reduce its volatility to 30%7Enter your answerin millions. For Open spreadsheet a. Using the Black Scholes option pricing model, how much is Fethe's equity worth? Enter your answer in milies. For example, an answer of $1.21 million should be entered as 1.21, not 1,210,000. Do not round intermediate calculations. Round your answer to two decimal places million b. How much is the debt worth today? Enter your answer in milions. For example, an answer of $1.21 million should be entered as 1.21, not 1,210,000. Do not round intermediate calculations. Round your answer to two decimal places, $ $ million What is its yield? Do not found intermediate calculations, Round your answer to one decimal place How would the equity value change of Fathe's managers could use risk management techniques to reduce its volatility to 90%. Enter your answer i milions for example, an answer of $1.21 million should be entered as 1.21, not 1,210,000. Do not round intermediate calculations, Round your mower to two decimal places New equity value $ million How would the yield on the debt change if Fethe's managers could use risk management techniques to reduce its volatility to 30%? Do not round intermediate calculations, Round your answer to one decimal place New yield on the debt: Check My Work Reset
