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 a recession is 40 percent. It is projected that Good Time
will genreate a total cash flow of $250 million in a boom year and
$100 million in a recession. The firm's required debt payment at the
end of the year is $150 million. The market fvalue of Good Time's
outstanding debt is $108.93 million. Assume a one-period model, risk
neutrality, and an annual discount rate of 12 percent for both the
firm's debt and equity. Good Time pays no taxes

a. what is the value of the firm's equity?
b. what is the prmised return on Good Time's debt?
c. What is the value of the firm?
d. How much would Godd Time's debt be worth if there were no bankruptcy costs?
e. What payoff, after bankruptcy costs, do bondholders expect to
receive in the event of a recession?
f. What costs do bondholders expect Good Time to incur should
bankruptcy arise at the end of the year?