(3 points) Your firm is considering issuing one-year debt, and has come up with the following estimates of the value of the interest tax shield and the probability of distress for different levels of debt. Which level of debt is optimal if, in the event of distress, the firm will have distress costs equal to 3 million? Use table below to complete your computations 1. Debt PV of Interest Tax Shield Probability of Distress Distress Cost PV of Distress Cost Expected PV of Dis tress Costs Gain 90 0 0.7 0.76 0.9 1.15 127 1.3 0 1% 2% 7% 16% 31% 40 5060 70 80 3 3 3 3 3 (3 points) Your firm is considering issuing one-year debt, and has come up with the following estimates of the value of the interest tax shield and the probability of distress for different levels of debt. Which level of debt is optimal if, in the event of distress, the firm will have distress costs equal to 3 million? Use table below to complete your computations 1. Debt PV of Interest Tax Shield Probability of Distress Distress Cost PV of Distress Cost Expected PV of Dis tress Costs Gain 90 0 0.7 0.76 0.9 1.15 127 1.3 0 1% 2% 7% 16% 31% 40 5060 70 80 3 3 3 3 3