3. Testir Corp. has outstanding 'zero coupon' debt of $600 million, so $600 million is due at the end of year 1. Testir begins a risky corporate strategy. Management estimates with a 60% probability, that the company's total will be worth $800 million at the end of year 1.A40% probability is that the company will be worth $500 million. If bankruptcy occurs, the distress costs will be 15% of the total asset value. Testir's cost of capital is 8%. - What is the present value of the company's $600 million in debt? - What is the present value of the equity? - Use a table to answer the