Question: problem A(20%) - . Free rate is 5%, the new product is equally likely to succeed of to fall, and the project he without (1)

problem A(20%) - . Free rate is 5%, the new product is equally likely to succeed of to fall, and the project he without (1) Con mite the value of this firm's secur... levt The value (2) Considering the cost of bankruptcy proposition I holds. Suppose that at the beginning of this year, the firm has 10 million shares outstanding and no debt. The firm then announces plans to issue one-year debt with a face value of $100 miltion and to use the proceeds to repurchase shares (Remember it is a leveraged recap). (3) Based on the information above, what will the new share price be? (A) Who pay for financial distress costs? How much? When? problem A(20%) - . Free rate is 5%, the new product is equally likely to succeed of to fall, and the project he without (1) Con mite the value of this firm's secur... levt The value (2) Considering the cost of bankruptcy proposition I holds. Suppose that at the beginning of this year, the firm has 10 million shares outstanding and no debt. The firm then announces plans to issue one-year debt with a face value of $100 miltion and to use the proceeds to repurchase shares (Remember it is a leveraged recap). (3) Based on the information above, what will the new share price be? (A) Who pay for financial distress costs? How much? When

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