The correct answer is A.

The value of the debt is given by formula:
$D(V,F,T,t) = P_t(T)F - p(V,F,T,t)$

From the problem, we have: P_t(T) = \`0.86 $, $ p(V,F,T,t) = \$19.37`$, and F = \`206.74` $

Therefore:
D(V,F,T,t) = \`0.86 \times \206.74` - \`19.37 $ $ \Rightarrow D(V,F,T,t) = \$158.43` \text{ million}$

Things to Remember

• The value of a zero-coupon bond is calculated as the present value of the face value discounted at the prevailing interest rate.
• A put option gives the holder the right, but not the obligation, to sell an asset at a specified price within a specified time period.
• The value of debt can be calculated using the formula for the put option on the firm's assets and the face value of the debt.
• Understanding the relationship between bond prices, interest rates, and time to maturity is crucial in valuing debt instruments.