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Question
Daniels, Inc. has assets valued at $2 million and 50,000 outstanding shares. A 5-year zero-coupon bond exists, which pays $400,000 at maturity. The bond is convertible into 10,000 shares. Assume σ = 0.30, r = 0.055, and no dividend is paid. What is the value of the bond?A) $402,672
B) $452,172
C) $415,022
D) $385,172
Answer
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