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Bedrock Company has $ 7 0 million in debt and $ 3 0 million in equity. The debt matures in one - year and has

Bedrock Company has $70 million in debt and $30 million in equity. The debt matures in one-year and
has a 10% interest rate, so the company is promising to pay back $77 million to its debtholders one-year
from now. The company is considering two possible investments, each of which will require an up-front
cost of $100 million. Each investment will last for one-year, and the payoff from each investment
depends on the strength of the overall economy. There is 50% chance that the economy will be weak
and a 50% chance it will be strong.
Here are the expected payoffs (all dollars are in millions) from the two investments:

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