Cost of Debt Capital Assignment

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Cost of Debt Capital Assignment

A firm has a 30% chance of producing $115 in cash flows next year, and a 70% chance of producing $200 in cash flows. Assume risk neutrality and a cost of capital of 8%.Your firm has debt with a face value of $100. Deadweight financial distress costs are $33. What is your firmʹs cost of debt capital?
a. 19.9%
b. 21.5%
c. 18.4%
d. 20.7%. Get Finance homework help today
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Cost of Debt Capital Assignment

 

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Cost of Debt Capital Assignment

A firm has a 30% chance of producing $115 in cash flows next year, and a 70% chance of producing $200 in cash flows. Assume risk neutrality and a cost of capital of 8%.Your firm has debt with a face value of $100. Deadweight financial distress costs are $33. What is your firmʹs cost of debt capital?
a. 19.9%
b. 21.5%
c. 18.4%
d. 20.7%. Get Finance homework help today
TOP ACADEMIC WRITER
He has decades of experience in the education field and has served in the examination boards of some of the top Universities within & outside the United States America.

Related

Cost of Debt Capital Assignment