Question

Rebecca is interested in purchasing a share in SpaceY, a hot new startup. SpaceY has a...

Rebecca is interested in purchasing a share in SpaceY, a hot new startup. SpaceY has a debt of $98.00M maturing in 86 days. Current asset value is $120.76M and fluctuates by 42% per year. The risk-free rate is 6.44%. Assuming a 360-day year, use Black-Scholes formula, to compute the price of 1 share of the call. Space Y has 2 million shares outstanding

Homework Answers

Answer #1

ANSWER IN THE IMAGE. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Rebecca is interested in purchasing a European call on a hot new​ stock, Up, Inc. The...
Rebecca is interested in purchasing a European call on a hot new​ stock, Up, Inc. The call has a strike price of $ 96.00 and expires in 91 days. The current price of Up stock is $ 117.65​, and the stock has a standard deviation of 40% per year. The​ risk-free interest rate is 6.53 % per year. Up stock pays no dividends. Use a​ 365-day year. a. Using the​ Black-Scholes formula, compute the price of the call. b. Use​...
A stock trades for ​$45 per share. A call option on that stock has a strike...
A stock trades for ​$45 per share. A call option on that stock has a strike price of ​$54 and an expiration date six months in the future. The volatility of the​ stock's returns is 42​%, and the​ risk-free rate is 44​%. What is the Black and Scholes value of this​ option?
A hedge fund with net asset value of $61 per share currently has a high water...
A hedge fund with net asset value of $61 per share currently has a high water mark of $67. Suppose it is January 1, the standard deviation of the fund’s annual returns is 31%, and the risk-free rate is 3%. The fund has an incentive fee of 10%. a. What is the value of the annual incentive fee according to the Black-Scholes formula? (Treat the risk-free rate as a continuously compounded value to maintain consistency with the Black-Scholes formula.) (Do...
Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $38,000 that...
Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $38,000 that matures in one year. The current market value of the firm’s assets is $41,400. The standard deviation of the return on the firm’s assets is 42 percent per year, and the annual risk-free rate is 4 percent per year, compounded continuously. a. Based on the Black-Scholes model, what is the market value of the firm's equity and debt? (Do not round intermediate calculations and...
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a...
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.20 (given its target capital structure). Vandell has $10.44 million in debt that trades at par and pays an 7.1% interest rate. Vandell’s free cash flow (FCF0) is $2 million per year and is expected to grow at a constant rate of 6% a year. Both Vandell and Hastings pay a 30% combined federal...
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a...
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.40 (given its target capital structure). Vandell has $10.62 million in debt that trades at par and pays an 8% interest rate. Vandell’s free cash flow (FCF0) is $1 million per year and is expected to grow at a constant rate of 6% a year. Both Vandell and Hastings pay a 40% combined federal...
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a...
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.30 (given its target capital structure). Vandell has $9.30 million in debt that trades at par and pays an 7.8% interest rate. Vandell’s free cash flow (FCF0) is $1 million per year and is expected to grow at a constant rate of 5% a year. Both Vandell and Hastings pay a 30% combined federal...
An analyst has developed an estimate of the earnings per share for her firm for the...
An analyst has developed an estimate of the earnings per share for her firm for the next year using the following parameters. Sales $20 million Cost of goods sold 70% of sales General & administrative expenses $300,000 Selling expense $100,000 plus 10% of sales Debt outstanding $5 million at 8% interest rate Effective tax rate 35% Common shares outstanding 2 million She is now interested in the sensitivity of earnings per share to sales forecast changes. A 10% sales increase...
Merger Bid Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding...
Merger Bid Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.30 (given its target capital structure). Vandell has $10.64 million in debt that trades at par and pays an 7% interest rate. Vandell’s free cash flow (FCF0) is $2 million per year and is expected to grow at a constant rate of 6% a year. Both Vandell and Hastings pay a 30%...
Problem 22-03 Merger Bid Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million...
Problem 22-03 Merger Bid Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.10 (given its target capital structure). Vandell has $9.86 million in debt that trades at par and pays an 8% interest rate. Vandell’s free cash flow (FCF0) is $2 million per year and is expected to grow at a constant rate of 5% a year. Both Vandell and Hastings pay...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT