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 $80, 000, and the projects cost of capital is 15%. The riskfree interest rate is 5%.

Two separate firms are considering investing in this project. The unlevered firm U plans to fund the entire $80,000 investment using equity, while firm L levered plans to borrow $45,000 at the riskfree rate and use equity to finance the remainder of the initial investment.

Construct a table as below, detailing the percentage returns to the equity holders of both the levered and unlevered firms for both the weak and strong economy. CF means Cash Flow

	Initial Value	CF Strong	CF Weak	Return S	Return W
Debt	$45,000	?	?	?	?
Levered Equity	$45,000	?	?	?	?
Unlevered	?	?	?	?	?