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A firm can be worth $50 million, $150 million, or $400 million, each with equal probabilities. The firm is financed with one bond, expecting to
A firm can be worth $50 million, $150 million, or $400 million, each with equal probabilities. The firm is financed with one bond, expecting to pay its promised $100 million at an expected interest rate of 5%. If the firms projects require an appropriate cost of capital of 10%, then what is the debts promised rate of return
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