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XYZ LTD., is undertaking a new project. If the project is successful, the value of the firm in a year will be $650 million, but if it turns out to be a failure, the firm will be worth only $250 million. The current value of the firm is $400 million. The firm has outstanding bonds due in a year with a face value of $300 million. The T-bill rate is 7 percent. What is the value of the equity? What is the value of the debt?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92389829

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