cort Industries owns assets that will have a(n) 75 % probability of having a market value of $ 58 million one year from now. There is a 25 % chance that the assets will be worth only $ 28 million. The current risk-free rate is 2 %, and Acort's assets have a cost of capital of 4 %. a. If Acort is unlevered, what is the current market value of its equity? b. Suppose instead that Acort has debt with a face value of $ 26 million due in one year. According to MM, what is the value of Acort's equity in this case? c. What is the expected return of Acort's equity without leverage? What is the expected return of Acort's equity with leverage? d. What is the lowest possible realized return of Acort's equity with and without leverage?

a. Current market value of the unlevered equity is $

nothing

million.(Round to three decimalplaces.)

b. Current market value of the levered equity is $

nothing

million. (Round to three decimalplaces.)

c. The expected return ofAcort's equity for each caseis:

Expected Return

WithoutLeverage:

nothing

% (Round to two decimalplaces.)

WithLeverage:

nothing

% (Round to two decimalplaces.)

d. The lowest possible realized return ofAcort's equity with and without leverageis:

Realized Return

WithoutLeverage:

nothing

% (Round to two decimalplaces.)

WithLeverage:

nothing

% (Round to two decimalplaces.)