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

question 54

Multiple Choice

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 (σ) 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.
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-Refer to the data for Wilson Dover Inc.What 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

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Definitions:

Operating Profit

The profit earned from a firm's core business operations, excluding deductions of interest and taxes.

Allocation Method

A way of assigning and distributing costs or revenues among different departments, projects, or entities within an organization.

Audit Report

A document prepared by an auditor which expresses an opinion on whether financial statements are presented fairly, in all material aspects, in accordance with the applicable financial reporting framework.