Multiple Choice
Suppose a firm has a current market value of $900 and outstanding debt with a face value of $850. The risk-free rate of interest is 6%. If the firm will have a value of either $650 or $900 next period, what is the value of the equity in the firm?
A) $0.00
B) $53.70
C) $57.36
D) $67.41
E) $89.65
Correct Answer:
Verified
Correct Answer:
Verified
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