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What is the expected return on the company debt

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Reference no: EM132927232

Question - Good Time Company is a regional chain department store. It will remain in business for one more year. The probability of a boom year is 60%, otherwise a recession would happen. It is projected that the company will generate a total cash flow of $126 in a boom year and $51 in a recession. The company's required debt payment at the end of the year is $75. The market value of the company's outstanding debt is $58. The company pays no taxes. What is the expected return on the company's debt?

Reference no: EM132927232

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