ABC corporation is an all equity firm with a current market value of $$100,$

and will be worth $$150$ or $ in one year. The risk$-$free interest rate is $12\mathrm{.}5\%.$

Suppose ABC wants to raise $$50$ today by issuing debt with face value of $$D$

maturing in one year. Assuming perfect capital markets use the binomial model

to answer the following:

What is the face value of the newly issued debt $($i$.$e$.,$ the value of $$D$

necessity to raise $$50$ today$)?$

Suppose ABC wants to raise $$40($instead of $$50).$ What is the value of

the newly issued debt in that case?