Katie D's Has Total Assets Valued at $3,160

Katie D's has total assets valued at $3,160.These assets are expected to be worth either $2,900 or $3,300 by next year.One year from now,the company must repay a $3,100 pure discount bond.The risk-free rate is 4.2 percent.What is the current value of the firm's debt?

A) $2,616.98
B) $2,971.55
C) $2,830.50
D) $2,886.79
E) $3,023.33

Correct Answer:

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