g. What if Ls debt is risky? For the purpose of this example, assume that the value
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g. What if L’s debt is risky? For the purpose of this example, assume that the value of L’s operations is $4 million (the value of its debt plus equity). Assume also that its debt consists of 1-year, zero coupon bonds with a face value of $2 million.
Finally, assume that L’s volatility σ is 0.60 and that the risk-free rate rRF is 6%.
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Financial Management Theory And Practice
ISBN: 9781439078105
13th Edition
Authors: Eugene F. Brigham, Michael C. Ehrhardt
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