Question: Is it correct or not? Use the information for the question(s) below. JR Industries has a $20 million loan due at the end of the

Is it correct or not? Use the information for the question(s)

Is it correct or not?

Use the information for the question(s) below. JR Industries has a $20 million loan due at the end of the year and under its current business strategy its assets will have a market value of only $15 million when the loan comes due. JR is considering a new much riskier business strategy. While this new riskier strategy can be implemented using JR's existing assets without any additional investment, the new strategy has only a 40% probability of succeeding. If the new strategy is a success, the market value of JR 's assets will be $30 million, but if the strategy fails the assets will be worth only $5 million. What is the expected payoff to debt holders under JR's new riskier business strategy? $4 million $20 million $15 million $11 million

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