In an influential paper in $1974,$ Bob Merton describes:

$$ equity in a firm as a call option on the value of the firm $($henceforth A$)$ with strike price equal to the outstanding debt the firm has $($henceforth D$).$

$$ Debt in the same firm as the combination of a long position in the assets of the firm $($A$)$ and a short put option with strike D$.$

$3$a$)$ Draw a graph of the payoff from equity according to Merton. Hint: the graph has on the x$-$axis the value of the firm.