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Alpha Co. has a loan value of $ 500,000 dollars due at the end of the year. The companys overall is valued only at 0.

Alpha Co. has a loan value of $ 500,000 dollars due at the end of the year. The companys overall is valued only at 0. 9 million by the end of the year with status quo. A new project is coming up. The pay off of the project is as the following Pro Success Fail Probability 0.5 0.5 Value at end of year $1.3 million $0.3 million With Alphas current level of debt, will the company suffer from excessive risk-taking, under investment or cash out problems due to leverage? Please show you analysis carefully.

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