Big Ed's Electrical has a pure discount bond that comes due in one year and has a face value of €1,000.The risk-free rate of return is 4%.The assets of Big Ed's are expected to be worth either
€800 or €1,300 in one year.Currently, these assets are worth €1,140.What is the current value of
The debt of Big Ed's Electrical?
A) €222.46
B) €370.77
C) €514.28
D) €769.23
E) €917.54
Correct Answer:
Verified
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