The Total Value (Debt Plus Equity) of Wilson Dover Inc

The total value (debt plus equity) of Wilson Dover Inc. is $500 million and the face value of its 1-year coupon debt is $200 million. The volatility () of Wilson DOver's total value is 0.60, and the risk-free rate is 5%. Assume that N(d1) = 0.9720 and N(d2) = 0.9050.
-is the value (in millions) of Wilson Dover's debt if its equity is viewed as an option?

A) $167.57
B) $186.19
C) $204.81
D) $225.29
E) $247.82

Correct Answer:

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