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 percent and the probability of a recession is 40 percent. It is projected that the company will generate a total cash flow of 210MM in a boom year and 85MM in a recession. The company’s required debt payment at the end of the year is 120MM. The MV of the company’s outstanding debt is $94 MM. The company pays no taxes.,A. What payoff do bondholders expect to receive in the event of a recession?,B. What is the promised return on the company’s debt?,C. What is the expected return on the company’s debt? ,
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