A company has a pure discount debt issue with a face value of $100. The...
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Finance
A company has a pure discount debt issue with a face value of $100. The issue is due in one year. At that time, the assets of the firm will be worth either $55 or $160, depending on the sales success of latest product. The assets of the firm are currently worth $110. If risk-free rate is 10 percent. What is the value of the equity in? The value of the debt? The interest rate on the debt?
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