The TrunkLine Company's debtholders are promised payments of $30 if the firm does well,but will receive only $20 if the firm does poorly.Bondholders are willing to pay $25.The promised return to the bondholders is approximately
A)2.9%
B)20.0%
C)27.3%
D)40.0%
E)100%

Question

Quizplus · Accepted Answer

The Answer of The TrunkLine Company's debtholders are promised payments of $30 if the firm does well,but will receive only $20 if the firm does poorly.Bondholders are willing to pay $25.The promised return to the bondholders is approximately
A)2.9%
B)20.0%
C)27.3%
D)40.0%
E)100%

The TrunkLine Company's Debtholders Are Promised Payments of $30 If