Consider a project with free cash flows in one year of either $150,000 or $120,000 with either outcome being equally likely. The initial investment required for the project is $85,000. The cost of capital is 20%. The risk free rate is 10%. If this project is sold to investors as an all-equity firm, what is the value of the unlevered equity? Assume no taxes or distress costs. $27,500 $112,500 $122,727 $37.727 $50,000