[arun]

for the Aggrochem 2010 qn,

for exercise price (Pe) – don’t we need to put Debt value as at End of Year 5 rather than PV (i.e Y0 value),
since BSOP formula it self doing the discounting function by “e” for exercise price.

same term to maturity (5yrs) and yield (8%) , don’t we need to put Pe as ( 3.000* 1.08^5 = 4.407) ?

But in question it is worded as, take the PV of equivalent zero coupon bond and in answer taken as 2.04175.

could you please advise

[Author]

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