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What is the debt promised rate of return

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Cliff Corp (CC) will be worth either $60 million, $80 million or $100 million in one year with equal probabilities. The firm has bonds outstanding with a promised payment of $75 million in one year at an expected rate of 6% and the required rate of return on the CC's assets is 12%. What is CC's equity cost of capital? What is the expected payoff of the debt? What is the debt's promised rate of return?

Reference no: EM132403011

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