Assume a firm’s debtholders are promised payments in one year of $35 if the firm does well and $20 if the firm does poorly. There is a 50/50 chance of the firm doing well or poorly. If bondholders are willing to pay $25.50, what is the promised return to those bondholders?

$2 or 7.84%

Explanation:

we need to determine the expected value of the firm's payments:

Since investors are willing to pay $25.50 and the expected value in one year is $27.50, the promised return = $27.50 - $25.50 = $2 or 7.84% (= $2 / $25.50)

typically a loft will include modern kitchen and bathrooms, this increases the price tag. lofts also have a good amount of open space, this requires more heating and electricity. lofts are also in older buildings, this means that maintaining the location increases the bill. keep in mind this is without talking about the high state and property taxes.

i hope this you! : )