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Este Incorporated (EI) in ready to launch a new product. Depending upon the success of this product, Este will have a value of $180 million,
Este Incorporated (EI) in ready to launch a new product. Depending upon the success of this product, Este will have a value of $180 million, $160 million, or $90 million, with each outcome being equally likely (33% probability). If the firm is bankrupt, the financial distress costs will be 15% of the remaining asset value. The project has a cost of capital equal of 5%. Suppose that Este has zero-coupon debt with a $140 million face value due next year. Calculate the present value of the Este debt... Consider the use of a table to make the calculations
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