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Suppose that rather than funding the initial investment with your own cash, you borrow $ 8 0 , 0 0 0 at the risk -

Suppose that rather than funding the initial investment with your own cash, you borrow $80,000 at the risk-free rate. The debt is due in full (with interest at t=1). When the firm is sold, that debt is passed on with the firm. What is the cash flow of the levered equity at t=1 in the high state?

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