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Posted on Jul 30, 2024

The value of a company is 1 0 0 0 expected to go up by 2 0 % or down by 1 0 % .

The value of a company is

1000

expected to go up by

20 %

or down by

10 % .

The company has a two

-

year zero

-

coupon debt with face value of

500 .

The risk free rate is

4 % .

The cost of equity is

14 % .

What is the yield on the debt?

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