Consider firm ABC that has a warehouse currently not used for anything. The liability of that warehouse is a debt of $15 million due in one year. If ABC does nothing, the warehouse will be worth $10 million in one year. Alternatively, ABC can redesign the warehouse with an upfront cost of $20 million, and then the warehouse will be worth $35 million in one year. Assume no tax, all the cash flows are risk-free, and the risk-free interest rate is 10%. 1. What is the value of ABC's equity today without the redesign? What is the value of the debt today? 2. What is the NPVof redesigning the warehouse? 3. Suppose the firm raises $20 million from equity holders to redesign the warehouse, then what is the value of ABC's equity today? What is the value of ABC's debt today? 4. Given your answer to part c, would equity holders be willing to provide the $20 million needed to develop the land? Is there any agency issue present here? (8 marks)