Good Time Co. is a regional chain department store. It will remain in business for one more year. The estimated probability of a boom year is 60 percent and that of a recession is 40 percent. It is projected that Good Time will have total cash flow of \($250\) million in a boom year and \($100\) million in a recession. Its required debt payment is \($150\) million per annum. Assume a one-period model.

Assume risk neutrality and an annual discount rate of 12 percent for both the stock and the bond.

a. What is the total stock value of the firm?

b. If the total value of bonds outstanding of Good Time is \($108.93\) million, what is the expected bankruptcy cost in case of recession?

c. What is the total value of the firm?

d. What is the promised return on the bond?