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Trio Corp. will exist for one year. Its terminal cash flows next year willbe $300,000 with probability 0.3, $500,000 with probability 0.3, or $800,000 with
Trio Corp. will exist for one year. Its terminal cash flows next year willbe $300,000 with probability 0.3, $500,000 with probability 0.3, or $800,000 with probability0.4. All investors are risk-neutral and require return of 12%. Ignore taxes. What is thevalue of the firm if it has debt obligations of $350,000 next year and the bankruptcy costs are$40,000?
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International financial management
Authors: Jeff Madura
12th edition
1133947832, 978-1305195011, 978-1133947837
