Air Taxi, Inc. and Wing Air, Inc. are identical in every way, except that Wing Air is a more levered firm. Both companies expect to remain in business for one more year. Here are the economist projections for the next year:

Probability of expansion	75%
Probability of recession	25%
Expansion EBIT	$3,700,000
Recession EBIT	$2,100,000
Air Taxi debt payment	$850,000
Wing Air debt payment	$1,300,000
Annual discount rate	12%

What is the value of each firm's debt and equity?

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