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The current value of the assets of Koster Meat Corporation is R250m. The assets are financed by a mix of equity and zero coupon debt.
The current value of the assets of Koster Meat Corporation is R250m. The assets are financed by a mix of equity and zero coupon debt. The current value of zero coupon debt is RSK 4804/101/0/2019 12 R70m and the final amount to be paid on maturity after 7 years is R200m, with an effective interest rate of 12%. The volatility in Koster Meat Corporations asset value is 25%. Compute the PD of Koster Meat Corporation based on the Merton model.
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