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THE VALUE OF A FIRM OR PROJECT IS 150 THAT CAN GO UP OR DOWN BY 20% PER PERIOD FOR TWO PERIODS. THE RISK FREE
THE VALUE OF A FIRM OR PROJECT IS 150 THAT CAN GO UP OR DOWN BY 20% PER PERIOD FOR TWO PERIODS. THE RISK FREE RATE IS 5% PER PERIOD. THERE IS ONE THIRD EQUITY AND TWO-THIRDS DEBT WITH 100 FACE VALUE MATURING AT THE END OF SECOND PERIOD. 1 WHAT WOULD BE THE COUPON RATE? 2 WHAT WOULD BE THE VALUE OF CALLABILITY IF THE DEBT WERE CALLABLE AT PAR? THE VALUE OF A FIRM OR PROJECT IS 150 THAT CAN GO UP OR DOWN BY 20% PER PERIOD FOR TWO PERIODS. THE RISK FREE RATE IS 5% PER PERIOD. THERE IS ONE THIRD EQUITY AND TWO-THIRDS DEBT WITH 100 FACE VALUE MATURING AT THE END OF SECOND PERIOD. 1 WHAT WOULD BE THE COUPON RATE? 2 WHAT WOULD BE THE VALUE OF CALLABILITY IF THE DEBT WERE CALLABLE AT PAR
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