Acort Industries owns assets that will have a(n) 75% probability of having a market value of $41 million in one year. There is a 25% chance that the assets will be worth only $11 million. The current risk-free rate is 9%, and Acort's assets have a cost of capital of 18%.

a. If Acort is unlevered, what is the current market value of its equity?

The current market value of the unlevered equity is $enter your response here million.(Round to three decimal places.)

Part 2

b. Suppose instead that Acort has debt with a face value of $8 million due in one year. According to MM, what is the value of Acort's equity in this case?

According to MM, the current market value of the levered equity is $enter your response here million. (Round to three decimal places.)

Part 3

c. What is the expected return of Acort's equity without leverage? What is the expected return of Acort's equity with leverage?

The expected return of Acort's equity for both cases is:

	Expected Return
Without Leverage:	enter your response here% (Round to two decimal places.)
With Leverage:	enter your response here% (Round to two decimal places.)

Part 4

d. What is the lowest possible realized return of Acort's equity with and without leverage?

The lowest possible realized return of Acort's equity in both cases will be:

	Realized Return
Without Leverage:	enter your response here% (Round to two decimal places.)
With Leverage:	enter your response here% (Round to two decimal places.)