Referring to the different options given in the table below, calculate the payoffs for lenders and shareholders
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Scenarios Hypothesis Debt Project 1 (assets in place) Debt Project 2 (new project) Expected cash flows project 1 (assets in place) Expected cash flows project 2 (new project) 200 100 75 200 100 75 200 100 150 200 100 150 100 180 100 180 Solution On-balance Off-balance Scenario Scenario 2 Scenario 3 Scenario 4
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Solution 1 on balance sheet financing Total cash flows 12 175 255 250 330 Total deb...View the full answer
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