Estimate the debt-assets ratio for company


Irving Company has total value $325 million, and it has $100 million (face value) of zero-coupon bonds maturing after 10 years. The σ of Irving is .45 and the risk-free interest rate is 5%. Using Black-Scholes model, estimate the debt/assets ratio for the company.

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Finance Basics: Estimate the debt-assets ratio for company
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