9. Default option (S24.2) Square Files assets are worth $100. It has $80 of zero-coupon debt outstanding
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9. Default option (S24.2) Square File’s assets are worth $100. It has $80 of zero-coupon debt outstanding that is due to be repaid at the end of two years. The risk-free interest rate is 5%, and the standard deviation of the returns on Square File’s assets is 40% per year. Calculate the present value of the company’s debt and equity.
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Related Book For
Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans
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