1 short a call option with a strike price of 125 and a, Ask an Expert

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1. Short a call option with a strike price of $1.25 and a premium of $0.12. Long a call option with a strike price of $1.35 and a premium of $0.02 Short a put option with a strike price of $1.35 and a premium of $0.03 Draw a final contingency graph including breakeven mas loss/gain.

2. New Schools expects an EBIT of $100,000 every year forever. The firm currently has no debt, and its cost of equity is 10 percent. The firm can borrow at 6 percent and the corporate tax rate is 20 percent. What will the value of the firm be if it converts to 50 percent debt? (50 percent of the levered firm value.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92838187

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