We want to know if scenario D is bankrupt. It will go bankrupt if the debt payment exceeds 100. Therefore, we start checking whether 100 is enough for the debt payment. Enough means that the discounted expected payoff exceeds the value today (90).
If we promise 100 to the bank, we pay 100 in every scenario that we are not bankrupt, even if we have a higher cashflow. Debt contracts cannot be conditioned on the scenario (by definition).
We observe that the bank does not lend us 90 if we promise 100, so we need to promise more than 100; hence going bankrupt in scenario D.
If we promise 100 to the bank, we pay 100 in every scenario that we are not bankrupt, even if we have a higher cashflow. Debt contracts cannot be conditioned on the scenario (by definition).
We observe that the bank does not lend us 90 if we promise 100, so we need to promise more than 100; hence going bankrupt in scenario D.