A firm has a single issue of a zero coupon debt that promises to pay $90 in 4 years, and the

A0 = $100, r = 5%, ? = 15%, and ? = 0. If the asset has no chance of total default, what is the value of the debt?

A) $67.10
B) $75.19
C) $85.62
D) $90.00

B

Business

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