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What is the value of the equity in this firm

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Reference no: EM131142029

The assets of Raceway Downs are currently valued at $789,000. The assets are expected to be worth either $770,000 or $830,000 one year from now. The company has a pure discount loan outstanding that matures in one year. The face value of the loan is $800,000. The risk-free rate of return is 5 percent and the inflation rate is 3.5 percent. What is the value of the equity in this firm?

a. $27,833

b. $31,407

c. $35,920

d. $37,548

Reference no: EM131142029

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