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The leveraged firms current debt-to-equity ratio is 1/3. The firms equity can be considered as a call option on a firm's assets with a delta
The leveraged firms current debt-to-equity ratio is 1/3. The firms equity can be considered as a call option on a firm's assets with a delta of 0.385. By how much will an NPV = $400,000 project increase the value of debt of the firm? A) $100,000 B) $154,000 C) $246,000 D) $300,000 E) $554,000
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