Q 18.17. You are a research scientist with a new drug idea. Only you can know who good it is. It costs $100 million to create a lab and test it. If it pans out, you get $500 million. If it does not, you can resell the lab. Alas, you do not have $100 million in cash. Assume the discount rate is 0. . What is the expected NPV of your project? If you did not know any better than your outside investors whether the drug will be successful, and you borrowed $100 million, how much would you expect to keep in each state? How much would your creditors get in each state? If you did not know any better than your outside investors whether the drug will be successful, and you sold equity at a fair price, how much equity would you have to sell and how much would you expect to keep in each state? If you did not know whether the drug will be successful, and you borrowed $100 million, how much would you expect to keep in each state? How much would your creditors get in each state? If you did not know whether the drug will be successful, and you wanted to finance the upfront cost with equity, how much equity would you have to sell? How much would you expect to keep in each state? If it was good, but your creditors assume you act in your self-interest and sell debt instead, how much would you lose by financing with equity instead of debt?