Exhibit 17.3 The Total Value (Debt Plus Equity) of Wilson Dover Inc

question 5

Multiple Choice

Exhibit 17.3
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.
-Refer to Exhibit 17.3.What is the value (in millions) of Wilson Dover's equity if it is viewed as an option?

• A)$228.77
• B)$254.19
• C)$282.43
• D)$313.81
• E)$345.19

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