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Title: Assume that in the event of default, 20% of the value of MI's assets will be lost in bankruptcy ... Post by: Memphic on Nov 20, 2017 Assume that in the event of default, 20% of the value of MI's assets will be lost in bankruptcy costs and suppose that MI has zero-coupon debt with a $140 million face value due next year. Calculate the value of levered equity, the value of debt, and the total value of MI with leverage.
Title: Re: Assume that in the event of default, 20% of the value of MI's assets will be lost in bankruptcy ... Post by: deusmaroto on Nov 20, 2017 VL = = $19.37 million
Vdebt = = $114.29 million Total Value = VL + Vdebt = $19.37 + $114.29 = $133.66 million |