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(Chap 14) Assume a firm has cash of $20 and a project (Project A) that is either worth $150 or $60 (50% chance of each).

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(Chap 14) Assume a firm has cash of $20 and a project (Project A) that is either worth $150 or $60 (50\% chance of each). Tho fim owes $120 to the bank. 5imilar to the exampie in class, the following shows the value of assets, debt, and equity where the amounts are caloulated based co the good atate, the bad stafe, and on expected values Base case market value balance sheet in the good state ( 60% chance) Base case market value balance sheet in the bad state ( 50% chance) Base case market value balance sheet based on oxpected values Now assume the firm is considering a new project (Project B) which requires an initial investment of $5. If the new project is acoopted, the $5 will be paid for using the firmi $ cash. Project B has a S41 cash flow in the good state and a $8 cash flow in the bad state. What is the expected value of the firm's debt if the firm decides to accept Project 8 ? Enter your answer to two decimal places (e.g., \$1250.00). Full credit wibhin $0.05 of the camect answer (e.g., $1249.95$1250.05 ). Partiai eredit within $0.25 of the ctirset ansuer (eg, $1249.75$1250.25)

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