An all$-$equity firm is operated in two market states: Expansion and Contraction.

It will generate $$1000$ in the expansion state and $$300$ in the contraction state.

The cost of borrowing is $10\%,$ the asset depreciation is $$50,$ and the corporate tax

rate is $40\%.$ If the firm takes a debt of $$4000,$ what will the firm$$s net income be in

the two states? What debt level should the firm take to just avoid a negative net

income?