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A firm has 65% probability of being worth $100 million and a 35% probability of being...

A firm has 65% probability of being worth $100 million and a 35% probability of being worth $130 million. There is one bond outstanding that promises to pay $100 million at an interest rate of 7%. The cost of capital for firmʹs projects is 9%. What is the current value of the firmʹs levered equity?                 

Group of answer choices

7.92                                                          

10.50

none are correct

101.38

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Answer #1

Pirmis expected future value=100m x 651)+ (1307x351.) .. . 65m + 45.5m : $ 110.5 million Current value of firms levered equi

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