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Suppose a company borrows $1 million debt to invest in a project that generates uncertain cash flow of $0-2 million. The debt has to be
Suppose a company borrows $1 million debt to invest in a project that generates uncertain cash flow of $0-2 million. The debt has to be repaid (interest rate is zero) when the projects cash flow is realized. 
e 1. DEST VALUE LOUITY VALLE COMPANY VALLE DEBT VALLE SMILION INOMA TV ANOS COMPANY VALUE MORE COMPANY REVENUE SMLLIONI 05 15 COMPANY EVENEMALONE COMPANY REVENUE SALICRO e 1. DEST VALUE LOUITY VALLE COMPANY VALLE DEBT VALLE SMILION INOMA TV ANOS COMPANY VALUE MORE COMPANY REVENUE SMLLIONI 05 15 COMPANY EVENEMALONE COMPANY REVENUE SALICRO 60% bankruptcy cost with bargaining power manager : creditor = 3 : 1
Please explain why you drew the line and how you got the strategic default point
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International Financial Management
Authors: Jeff Madura, Roland Fox
5th Edition
1473770505, 978-1473770508
