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Tescac's assets are worth $290. It has $175 of zero-coupon debt outstanding that is due to be repaid at the end of two years. The
Tescac's assets are worth $290. It has $175 of zero-coupon debt outstanding that is due to be repaid at the end of two years. The risk-free interest rate is 5%, and the standard deviation of the returns on Tescac's assets is 40% per year. A. What is the value of the put option owned by shareholders? B. What is the value of the company's debt? C. What is the value of the company's equity? please DO NOT answer using hand written notes. and please organize your work so that I can undersand how to use Black-Scholes formula in excel. Thank you.
Tescac's assets are worth $290. It has $175 of zero-coupon debt outstanding that is due to
be repaid at the end of two years. The risk-free interest rate is 5%, and the standard deviation
of the returns on Tescac's assets is 40% per year.
A. What is the value of the put option owned by shareholders?
B. What is the value of the company's debt?
C. What is the value of the company's equity?
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