Question: Please help me solve this problem, show formula and detail steps thank you! 2. Good Time Company is a regional chain department store. It will

Please help me solve this problem, show formula and detail steps thank you!

2. Good Time Company is a regional chain department store. It will remain in business for one more year. The probability of a boom year is 60 percent and the probability of a recession is 40 percent. It is projected that the company will generate a total cash flow of $185 million in a boom year and $76 million in a recession. The companys required debt payment at the end of the year is $110 million. The market value of the companys outstanding debt is $83 million. The company pays no taxes. a. What payoff do bondholders expect to receive in the event of a recession? b. What is the promised return on the companys debt? c. What is the expected return on the companys debt?

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