1. a) Boxer Ltd manufactures plywood sheets used in the building industry. The selling price per sheet is 10.60 in the economy's good state and 7.30 in the bad state. The risk-neutral probability of each of these states is 0.5. Boxer can sell all the sheets that it produces. The sheets can be made from either two types of wood, pine and fir. The cost per sheet using pine is 10.10 in the good state and 6.80 in the bad state. The cost per sheet using fir is 9.10 in the good state and 8.50 in the bad state. Boxer is committed to producing one million sheets during the current year (year 1) using pine and is planning its production for year 2. Assume a risk-free rate of zero. If Boxer produces one million sheets using pine in year 2, what is the expected present value of the year 2 net cash flow? What is its expected present value if Boxer uses fir? Lawson, an entrepreneur, can secretly buy 5% of Amble's shares at the current market price, then make a public bid for a further 46% of the total number of shares at $11 each. What is Lawson's profit? Will the takeover go ahead? Explain