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Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy, with each outcome

Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy, with each outcome being equally likely. The initial investment required for the project is $90,000, and the project's cost of capital is 15%. The risk-free interest rate is 5%.

Please fill up the following table and show the percentage returns to the equity holders of both the levered and unlevered firms for both the weak and strong economy.image text in transcribed

\begin{tabular}{lccccc} \hline & Initial & Cash Flow Strong Value & Cash Flow Weak Economy & Returns Economy & Returns Economy Weak Economy \\ \hline Debt & $45,000 & & & & \\ \hline Levered Equity & $45,000 & & & & \\ \hline \end{tabular} \begin{tabular}{llll} \hline Unlevered Equity & $90,000 & $117,000 & $90,000 \end{tabular}

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