A firm has debt that will come due in one year. The total face value plus interest that will be due on the debt is 200 million. The firm's position has steadily deteriorated since it issued the debt five years ago. Its only remaining asset is 50 million in cash. The firm has the opportunity to take one of two projects, each of which costs 50 million. Assume that investors are risk neutral and the risk-free rate is 10%. Project A Payoff in one year: 400 million with probability 0.05 and 0 with probability 0.95 Project B Payoff in one year: 100 million with probability 0.6 and 60 million with probability 0.4 How would the firm rank the potential actions it can take, from best to worst, if: There exists a debt agency problem? b. Disregarding part (a), there does not exist any agency problems? A firm has debt that will come due in one year. The total face value plus interest that will be due on the debt is 200 million. The firm's position has steadily deteriorated since it issued the debt five years ago. Its only remaining asset is 50 million in cash. The firm has the opportunity to take one of two projects, each of which costs 50 million. Assume that investors are risk neutral and the risk-free rate is 10%. Project A Payoff in one year: 400 million with probability 0.05 and 0 with probability 0.95 Project B Payoff in one year: 100 million with probability 0.6 and 60 million with probability 0.4 How would the firm rank the potential actions it can take, from best to worst, if: There exists a debt agency problem? b. Disregarding part (a), there does not exist any agency problems