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RPC's Assets Are Currently Worth $2,700

Question 78

Multiple Choice

RPC's assets are currently worth $2,700. In one year, they will be worth either $2,000 or $3,500. The risk-free interest rate is 3.5 percent. Suppose the firm has an outstanding debt issue with a face value of $2,500. What is the current value of the firm's debt?


A) $2,377
B) $2,114
C) $2,188
D) $2,263
E) $2,425

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