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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 $ at the riskfree rate. The debt is due in full with interest at t When the firm is sold, that debt is passed on with the firm. What is the cash flow of the levered equity at t in the high state?
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