Question: A firm is worth $ 7 5 or $ 2 1 0 with equal probability and is financed with debt that has a face value
A firm is worth $ or $ with equal probability and is financed with debt that has a face value of $ It is considering a new project that is equally likely to be worth $ or $ The cost of capital is for all securities What will the bondholder's require as a return on their investment if they fear expropriation?
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