Debt
Overhang: Loan Commitments
0
1150
0
550
Stockholders’ claim
4100
5550
(4500x1.1+600)
2400
4450 (3500x1.1+600)
Bondholders’ claim
4100
6700
2400
5000
Firm Cashflows
Recess’n
Boom
Recess’n
Boom
Firm W/ Proj
Firm W/o Proj