1)Parkville, Inc. will introduce a new product to the market. Depending on how the product will do in the market, Parkville estimates that the firm will have a value of either $140 million, $200 million, or $270 million next year, with equal probability for each of the three outcomes. Assume that the cash flows are unrelated to the state of the economy (i.e. risk from the project is diversifiable) so that the project has a beta of 0 and a cost of capital equal to the risk-free rate, which is currently 5%. Assume perfect capital markets. Suppose that if Parkville defaults, the value of firm's assets will go down by 30% due to bankruptcy costs and assume that Parkville has zero-coupon debt with a $160 million face value that is due next year. The total value of Parkville today with leverage is closest to: options:

$75 million

$154 million

$180 million

$219 million

None of the above

2 )DownUnder Exploration is an oil and gas exploration firm in Australia. The firm is currently operating two active oil fields in the state of Western Australia and each oil field has a market value of $400 million dollars. DownUnder, however, is in financial distress as it has $850 million in debt coming due at the end of the year. A large oil company has offered DownUnder a highly speculative, but potentially very valuable, oil and gas lease in exchange for one of Downunder's active oil fields. If DownUnder accepts the exchange, there is a 30% chance that DownUnder will discover a major new oil field that would be worth $1.9 billion, a 30% chance that DownUnder will discover a productive oil field that would be worth $600 million, and a 40% chance that DownUnder will not discover any oil at all. What is the expected payoff to equity holders of DownUnder with the speculative oil lease deal? options:

$80 million

$220 million

$340 million

$480 million

None of the above

Please show work for both questions. I need to see the calculations. thanks