Question
Ecolab Corporation has a $28,000 pure discount bond that comes due in one year. The risk-free rate of return is 3.5 percent. The firm's assets
Ecolab Corporation has a $28,000 pure discount bond that comes due in one year. The risk-free rate of return is 3.5 percent. The firm's assets are expected to be worth either $26,000 or $35,000 in one year. Currently, these assets are worth $30,000. What is the current value of the firm's debt?
| $25,783.44 | ||
| $26,205.05 | ||
| $27,366.27 | ||
| $28,569.81 | ||
| $29,809.45 |
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
14th edition
1285867971, 978-1305480742, 1305480740, 978-0357686393, 978-1285867977
