Next period a firm will be worth $ 5 8 with 1 5 % probability, $ 9
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Question:
Next period a firm will be worth $ with probability, $ with probability, and $ otherwise. The firm has one senior bond outstanding with a face value of $ and one junior bond outstanding with a face value of $ The senior bond has a promised return of The junior bond has a promised return of The firm's required return on assets is What is the value of the firm's equity? Give your answer in dollars to the nearest $
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