Stochastic Discounted Cash Flow by Lutz Kruschwitz & Andreas Löffler

Author:Lutz Kruschwitz & Andreas Löffler
Language: eng
Format: epub, pdf
ISBN: 9783030370817
Publisher: Springer International Publishing

2.Show that in the infinite example with constant (riskless) debt for all t

3.Show in the infinite example with constant (riskless) debt that the dividend-price ratio of the levered firm is a random variable (i.e., not deterministic) if r f ≠ k E, u.

4.Consider the finite example with default. Evaluate the Q-expected cash flows (see Fig. 3.6) and verify that the firm has indeed a value of 240.30.

5.Consider the finite example with default. Evaluate the cost of debt as a function of debt D 2 ≤ 70.

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