(Solved): Thomas M. specializes in buying high-risk commercial paper; his required return on these investments ...

Thomas M. specializes in buying high-risk commercial paper; his required return on these investments is 13.6 percent per year. He is considering buying some 60-day paper from Sandhill Corp. with a promised yield of 8.6 percent per year. However, Thomas believes there is a 1-percent chance that Sandhill will default on this debt, in which case he would recover only 70 percent of the face value. How much will Thomas be willing to pay for each

par value of this paper? (Round answer to 2 decimal places, e.g. 5,275.75.) Expected value $