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The value of a firm's future cash flows is estimated at 230M. The continuously compounded risk-lree rate is 3%. The duration of firm's debt is

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The value of a firm's future cash flows is estimated at 230M. The continuously compounded risk-lree rate is 3%. The duration of firm's debt is 11 years. The face value of the firm's debt is 280M. The volatility of firm cash flows is 0.22 . The firm pays no dividends. Use the notion of equity as a call option on the value of the firm. Let the firm now accept a project that has an NPV of 10M and increases the volatility of the firm to .30 . 35. What is the new value of the firm's equity

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