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the trunkline company will earn $60 in one year if it does well. the debtholders are promised payments of $35 in one year if the firm does well. if the firm does poorly, expected earnings in one year will
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the trunkline company will earn $60 in one year if it does well. the debtholders are promised payments of $35 in one year if the firm does well. if the firm does poorly, expected earnings in one year will be $30 and the repayment will be $20 because of the dead weight cost of bankruptcy. the probability of the firm performing poorly or well is 50%. if bondholders are fully aware of these costs what will they pay for the debt? the interest rate on the bonds is 10%.

User Kevin Chen
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Answer:JJJJJJJJJJJJJJJJJJJJ;RSJIGKM

Explanation:LAAAAAAAAREJGA;ORE

User Christostsang
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