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The price of Ervin Corp. stock will be either $75 or $95 at the end of the year. The current stock price is 80$. What

  1. The price of Ervin Corp. stock will be either $75 or $95 at the end of the year. The current stock price is 80$. What is the price of a call option with the exercise price of $90 if the risk free rate is 10%?

Buckeye Industries has a bond issue with a face value of $1000. The value of Buckeyes asset is $1200. In one year they will be worth either $800 or $1400. The going rate on T-bill is 4 percent. What is the value of debt, equity, and interest rate on debt?

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