A firm has 65% probability of being worth $100 million and a 35% probability of being worth $130 million. There is one bond outstanding that promises to pay $100 million at an interest rate of 7%. The...


A firm has 65% probability of being worth $100 million and a 35% probability of being worth $130 million.  There is one bond outstanding that promises to pay $100 million at an interest rate of 7%. The cost of capital for the firmʹs projects is 9%. What are the current proportions of debt and equity financing used by the firm?

Group of answer choices

a.43.48%  debt; 56.52%  equity



b.Not determinable



c.7%  debt; 93%  equity



d.92.19%  debt; 7.81%  equity




Jun 03, 2022
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