TL Company Has Outstanding Debt of $50 That Is Due

Multiple Choice

TL Company has outstanding debt of $50 that is due in one year.However,given the financial distress costs,the debtholders will only receive $40 if the firm does well and $15 if it does poorly.The probability the firm will do well is 60 percent with the 40 percent probability assigned to poor conditions.What is the current value of the debt if the discount rate is 8 percent?

A) $27.78
B) $27.50
C) $30.00
D) $26.67
E) $28.40