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Good Time Company is a regional chain department store. It will remain in business for one more year. The probability of a boom year is

Good Time Company is a regional chain department store. It will remain in business for one more year. The probability of a boom year is 70 % and the probability of a recession is 30%. It is projected that the company will generate a total cash flow of 185 million in a boom year and $ 76 million in a recession. The company's required debt payment at the end of the year is $110 million. The market value of the company's outstanding debt is $83 million. The company pays no taxes. What is the expected return on the company's debt

A.

14.19%

B.

20.24%

C.

16.8%

D.

- 8.04%

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