About the debt outstanding

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The Schuhmacher corporation has debt outstanding. The total amount that it will have to pay to bondholders in one year's time at date 1 is $100 million. The firm's position since it has issued the debt five years about has steadily deteriorated. It only remaining asses its $25 million in cash. If it does nothing the bondholders will receive all the cat and any interest the cash might earn. The firm has the option to undertake a project that cost $25 million today and at date 1 there is a 5% chance of success, which yields 200 million payoff. However, with 95% probability, the project will pay nothing. Thats the elected payoff to debt holders in date 17? A) 5 Million B) 10 Million C) 25 Million D) 15 million

Reference no: EM131178408

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