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A new project has the following payoffs and probabilities of the states of the nature: Prob.10%85%5%Payoff50200400 Assume risk neutrality. If a bond with $100 face

A new project has the following payoffs and probabilities of the states of the nature:

Prob.10%85%5%Payoff50200400

Assume risk neutrality. If a bond with $100 face value collateralized by this project promises an interest rate of 8%, then what is the expected cost of capital?

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