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The assets of a company are currently worth $100. These assets are expected to be worth either $125 or $80 one year from now. The

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The assets of a company are currently worth $100. These assets are expected to be worth either $125 or $80 one year from now. The company has a pure discount bond outstanding with $85 face value and a maturity date of one year. The risk-free rate is 5.4 percent. What is the market value of the debt in this firm today? What is the yield on the debt? Hint: Yield = [Parl(market value of debt)] - 1 Select one: O a $82.12: 6.8% b. $78.58; 8.2% c. $100.00; 5.4% d. $80: 5.4% e. $21.42; 8.2%

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