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Assume markets are perfect and that Geralt lnc . has assets that will generate eash flows of either $ 1 0 0 million or S
Assume markets are perfect and that Geralt lnc has assets that will generate eash flows of either $ million or S million a year from today,
What are the possible payolts to Geralt's investors if it has only issued equity and no debt?
b What are the possible payolls to Geralt's investors if Geralt has issued debt that matues for slou million a year from today in addition to its equity?
c What are the possible payofls to Geralt"s investors if Gerali has issued debt that matures for $ million a year from today in addition to its equity?
d What conclusions can we draw about the rates of return on the bonds in parts b and e
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