Cristiano plc and Lionel plc are identical firms except that Lionel is more levered. Both companies will remain in business for one more year. The economy has recently been expanding. According to consensus forecasts, the probability of the continuation of the current expansion is 75% for the next year, and the probability of a recession is 25%. If the expansion continues, each firm will generate profit before interest and taxes of 2 million. If a recession occurs, each firm will generate profit before interest and taxes of 800,000. Cristiano's debt obligation requires the firm to pay 500,000 at the end of the year. Lionel's debt obligation requires the firm to pay 600,000 at the end of the year. Neither firm pays taxes. Assume a discount rate of 15 per cent. What is the market value of (i) Cristiano plc and (ii) Lionel plc? Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a (i) 1,321,739 and (ii) 1,478,261 b (i) 1,478,261 and (ii) 1,478,261 c (i) 1,478,261 and (ii) 1,321,739 d (i) 1,321,739 and (ii) 1,321,739 e None of the above