Mid States Company is a regional chain department store. It will remain in business for one more year. The probability of a boom year is 80 percent...

Mid States Company is a regional chain department store. It will remain in business for one more year. The probability of a boom year is 80 percent and the probability of a recession is 20 percent. It is projected that the company will generate a total cash flow of $196 million in a boom year and $87 million in a recession. The company's required debt payment at the end of the year is $121 million. The market value of the company's outstanding debt is $94 million. The company pays no taxes.