Consider a firm that currently has debt with face value of $1000 that will come due in one year and assets that are projected to be worth $900 in one year.

Suppose the firm has the opportunity to invest in a new project requiring an immediate investment of $100 and offering a return of 50% in one year.

Suppose the only way to get the $100 for the initial investment is for the existing equity holders to contribute it.

Assume the required rate of return for this project is less than 50%, should the firm invest in the project?