Consider a firm whose only asset happens to be a plot of land that is vacant.

Consider a firm whose only asset is a plot of vacant land, and whose only liability is debt of S15.3 million due in one year. If left vacant, the land will be worth Sl 0.4 million in one year Alternatively: the firm can develop the land at an up-front cost of $197 million. The developed the land will be worth $353 million in one year. Suppose the risk-free interest rate is 10.1%, cash flows are risk-free, and there are no taxes. a. If 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 519.7 million from the equity holders to develop the land. If the firm develops 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 S19.7 million needed to develop the land? a. Ifthe 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? If the firm chooses not to develop the land, the value of the equity is million. (Round to two decimal places) If the firm chooses not to develop the land, the value of the debt is million. (Round to two decimal places.) b. What is the NPV of developing the land? The NPV of developing the land is million. (Round to two decimal places.) c. Suppose the firm raises S19_7 million from the equity holders to develop the land. If the firm develops the land, what is the value of the firm's equity today? What is the value of the firm's debt today? Ifthe firm raises $19.7 million from the equity holders to develop the land, the value of equity is million. (Round to two decimal places.) Ifthe firm raises $19.7 million from the equity holders to develop the land, the value of debt is million. (Round to two decimal places) d. Given your answer to part (c), would equity holders be willing to provide the S19.7 million needed to develop the land? (Select the best choice below) No. Equity holders will not be willing to accept the deal because for them it is a positive-NPV investment. Yes. Equity holders will be willing to accept the deal because for them it is a positive-NPV investment. No. Equity holders will not be willing to accept the deal because for them it is a negative-NPV investment. Yes. Equity holders will be willing to accept the deal because for them it is a negative-NPV investment.