Ax co has risky assets which can generate either 100m or 16m both same probability. Ax co has a 29m debt due in 1yr. they are thinking about a new project rquires 18m investment. but generates 22m cflow in 1yr.Ax co has 18m in cash available, if not used, it will be for paying equityholder as dividend.

expected value of Ax co equity& debt without and with the new project? what is the incremental value to the equityholder? will the project be accepted?

if Ax co sold 1/2 of the risky asset (29m) to pay the debt then take the project wht is the expected value of Ax co debt& equity? will equity&debtholder accep this? why?