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 debt?

a) 91.7

b)none are correct

c)100.0

d)93.5

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 are the current proportions of debt and equity financing used by the firm?

a) 7% debt; 93% equity

b) Not determinable

c) 43.48% debt; 56.52% equity

d) 92.19% debt; 7.81% equity