“In a world that is not perfect but risk neutral, assume that the firm has project worth $100 in the down state, $500 in the up state. The cost of capital for projects is 25%. However, if you could finance it with 50-50 debt, the cash flow rights alone are enough to make the cost of capital a lower 20%. Managers are intransigent and do not want to switch to this new capital structure. You only have $60 of capital and cannot borrow more to take over the firm. What can you do?” I see where this question has been answered before, the document is Finance-7614374.doc, but I can’t seem to open it.