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 $75 or $210 with equal probability and is financed with debt that has a face value of $80. It is considering a new project that is equally likely to be worth -$50 or +$55. The cost of capital is 12% for all securities. What will the bondholder's require as a return on their investment if they fear expropriation?
44.7%
12.0%
29.2%
25.4%
 A firm is worth $75 or $210 with equal probability and

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