1)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 the firms projects is 9%. What is the expected payoff on the bond? A)109 B) 115 C)100 D)111

2)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 the firms projects is 9%. What is the current value of the firms levered equity?

a)10.50 b)7.92 c)none are correct d)101.38