6. (20 pts.) Suppose a company is financed by a combination of $200 worth of bonds bearing interest at the risk-free rate of 5% and equity for the remainder of its capital structure. Find the value of the firm if all investors are risk neutral (they look only at expected values) and if they believe the value of the firm at the beginning of the next period to be X. Assume no taxes. 1000, 300, x= Now suppose that the equity holders continue to believe that the distribution of the firm's earnings is X but that the bondholders believe it is Y. Y= 900, 200, J Again assuming risk neutrality and no taxes, recompute the market value of the firm. The nominal rate of interest on the bonds remains 5%. What does the foregoing tell you about bankruptcy probabilities, the M&M (Modigliani-Miller) theorem, and the existence of an optimal capital structure? 6. (20 pts.) Suppose a company is financed by a combination of $200 worth of bonds bearing interest at the risk-free rate of 5% and equity for the remainder of its capital structure. Find the value of the firm if all investors are risk neutral (they look only at expected values) and if they believe the value of the firm at the beginning of the next period to be X. Assume no taxes. 1000, 300, x= Now suppose that the equity holders continue to believe that the distribution of the firm's earnings is X but that the bondholders believe it is Y. Y= 900, 200, J Again assuming risk neutrality and no taxes, recompute the market value of the firm. The nominal rate of interest on the bonds remains 5%. What does the foregoing tell you about bankruptcy probabilities, the M&M (Modigliani-Miller) theorem, and the existence of an optimal capital structure