Use the Following Information to Answer the Question(s) Below

question 28

Multiple Choice

Use the following information to answer the question(s) below.
Galt Industries is trading for $20 per share and has 25 million shares outstanding. Galt Industries has a debt-equity ratio of 0.4 and its debt is zero coupon debt with a ten year maturity and a yield to maturity of 8%.
-In describing Galt's equity as a call option,the market value of the assets underlying the call option are:

• A) $200 million
• B) $300 million
• C) $500 million
• D) $700 million

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