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Altempt Down Browser HW Comp. is a company whose assets are currently worth less than its face value of debt the book value of debt
Altempt Down Browser HW Comp. is a company whose assets are currently worth less than its face value of debt the book value of debt is $2,500 and market value of assets is 12,000. The company is considering investing in a one year project with the payoffs as indicated below. The discount rate is 15%, the tax rate is 0%, and the cost of investment is $2,000. The firm's assets are to be entirely invested in this new project. What is the NPV to bondholders from this investment? Probability Payoff in year 1 20% $4,000 $500 80% $695.65 $800.00 -$956.52 $1,100.00 $1,21710
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