Consider a project with projected profits in one year of $130,000 or $180,000, with each outcome being equally likely. The initial investment required for the project is $100,000, and the projects risk premium is 15%. The risk-free interest rate is 5%.

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 waythat is, what is the initial market value of the unlevered equity?