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State Corporation has a $38,000 pure discount bond that comes due in one year. The risk-free rate of return is 3 percent. The firm's assets
State Corporation has a $38,000 pure discount bond that comes due in one year. The risk-free rate of return is 3 percent. The firm's assets are expected to be worth either $36,000 or $44,000 in one year. Currently, these assets are worth $40,000. What is the current value of the firm's debt?
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