Consider a project with free cash flow in one year of $$137,759$ or $$191,222,$ with either outcome being equally likely. The initial

investment required for the project is $$95,000,$ and the project's cost of capital is $18\%.$ The risk$-$free interest rate is $8\%.($Assume no

taxes or distress costs.$)$

The NPV is $$44400.($Round to the nearest dollar.$)$

b$.$ Suppose that to raise the funds for the initial investment, the project is sold to investors as an all$-$equity firm. The equity holders will

receive the cash flows of the project in one year. How much money can be raised in this way$-$that is$,$ what is the initial market value of

the unlevered equity?

The initial market value of the unlevered equity is $$139400.($Round to the nearest dollar.$)$

c$.$ Suppose the initial $$95,000$ is instead raised by borrowing at the risk$-$free interest rate. What are the cash flows of the levered equity,

and what is its initial value according to M&M$?$

The cash flows of the levered equity and the initial market value of the levered equity according to M&M is: $($Round to the

nearest dollar.$)$