Question
A firm has a 35% chance of producing $90 in cash flows next year, and a 65% chance of producing $200 in cash flows. Assume
A firm has a 35% chance of producing $90 in cash flows next year, and a 65% chance of producing $200 in cash flows. Assume risk neutrality and a cost of capital of 6%. What is the value of the firm if debt has a face value of $100, and deadweight financial distress costs are $23?
Group of answer choices
188.68
153.45
144.76
114.04
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Cases In Healthcare Finance
Authors: Louis C. Gapenski, George H. Pink
4th Edition
1567933424, 978-1567933420
