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Consider a business with assets worth either $40,000 with probability 0.3, or $100,000 with probability 0.7. The business has an expected value of 582,000. Based
Consider a business with assets worth either $40,000 with probability 0.3, or $100,000 with probability 0.7. The business has an expected value of 582,000. Based on the riskiness of the assets, investors would require an 8% expected return on the assets. if the business is financed with a 540,000 loan today, what is the current value of equity?
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