ANSWER THE ENTIRE QUESTION

Question Help O Consider a firm whose only asset is a plot of vacant land, and whose only liability is debt of $14.6 milion due in one year. I ett vacant, the land will be worth $10.1 milion in one year. Alternatively, the firm can develop the land at an up front cost of $20.3 million. The developed the land will be worth 5354 milion in one year. Suppose the risk tree interest rate is 0.9%, assume all cash flows are risk-free, and there are no aces at the firm chooses not to develop the land, what is the value of the firm's equity today? What is the value of the debt today? b. What is the NPV of developing the land? c. Suppose the firm raises 520 3 milion from the equity holders to develop the land of the firm develop the land what is the value of the firm's equity today? What is the value of the firm's debt today? d. Given your answer to part (c) would equity holders be willing to provide the $20.3 million needed to develop the land? a. If the firm choose not to develop the land what is the value of the firm's equity today? What is the value of the debt today? If the firm chooses not to develop the land, the value of the equity is $milion (Round to two decimal places) If the firm choose not to develop the land, the value of the debt is smilion Round to two decimal places) b. What is the NPV of developing the land? The NPV of developing the land is $milion Round to two decimal d places) c. Suppose the firm raises $20.3 million from the equity holders to develop the land of the fim develops the land what is the value of the firm's equity today? What is the value of the firm's debe today? If the firm raises $20.3 million from the equity holders to develop the land, the value of any i milion Round to no decimal places) of the firm raises $20.3 million from the equity holders to develop the land, the value of debt is 1 milion (Round to wo decimal places) d. Given your answer to part (e), would equity holders be willing to provide the $20.3 million needed to develop the land? (Select the best choice below) O A. Yes. Equity holders will be willing to accept the deal because for them it is a positive NPV investment OB. No. Equity holders will not be willing to accept the deal because for them it is a positive NPV investment OC. No. Equity holders will not be willing to accept the deal because for them it is a negative-NPV investment OD. Yes. Equity holders will be willing to accept the deal because for them it is a negative-NPV investment