Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. fethe inc. is a custom manufacturer of guitars, ma

Fethe Inc. is a custom manufacturer of guitars, mandolins, and other stringed instruments and is...

50.1K

Verified Solution

Question

Finance

Fethe Inc. is a custom manufacturer of guitars, mandolins, and other stringed instruments and is located near Knoxville, Tennessee. Fethe's current value of operations, which is also its value of debt plus equity, is estimated to be $7 million. Fethe has $3 million face value, zero coupon debt that is due in 2 years. The risk-free rate is 6%, and the standard deviation of returns for companies similar to Fethe is 45%. Fethe's owners view their equity investment as an option and would like to know the value of their investment.

image decimal places. \\[ \\$ \\quad \\text { million } \\] \\[ \\$ \\quad \\text { million } \\] What is its yield? Do not round intermediate calculations. Round your answer to one decimal place. \ intermediate calculations. Round your answer to two decimal places. New equity value: \\[ \\$ \\quad \\text { million } \\] New yield on the debt: \

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Geometry
1.2K views

Find the area of the right triangle 1 unit O Area 0

Finance
1.2K views

A company has a proposed 2-year project with the cash flows shown below and would like...

Biology
1.2K views

The phenotypic ratio resulting from a DIHYBRID showing independent assortment is expected to and the...

Geometry
1.2K views

In circle G with m FGH 60 and FG 19 units find the length of...

Basic Math
1.2K views

Find the midpoint of WX.W = (-1, 5)X = (7,3)

Basic Math
1.2K views

Select the correct answer.What is the variable being tested in an experiment?A. control variableB. response...

Calculus
1.2K views

30 Part 5 of 5 Since T 75 110e 1 30 In 15 22 t...

Algebra
1.2K views

1 Using a graph find all the roots of the quadratic x 4x 1 rounding...

Accounting
1.2K views

Annapolis Company completes job #601 which has a standard of 580 labor hours at a...

Accounting
1.2K views

anment Help Se A car dealer acquires a used car for $14,000, with terms FOB...

Accounting
1.2K views

fashion QUESTION 17 Cost-volume-profit analysis assumes that total costs behave in a Exponential Linear Regressive...

Accounting
1.2K views

Suppose this information is available for PepsiCo, Inc. for 2020,2021, and 2022. \table[[(in...