Dany Ekwood has two mutually exclusive start-up ideas that require the same investment of $75 thousand at time t=U. The rst idea is an audio streaming service that will generate at lime t=2 a cash flow of $1213 thousand with probability 0.6 or a cash ow of $50 thousand with probability 0.4. The second idea is a platform for digital audio-books that will generate at time t=2 a cash ow of $140 thousand with probability 0.4 or a cash ow of $10 thousand with probability 0.6. Deny has no moneyto invest in his ideas and must raise all the funds externally. The risk-free rate is zero and all agents are risk neutral; a) Find the net present value (NPV) of each project. [2 mm] b) Deny approaches a bank to raise all the funds needed. The bank believes that Deny will invest in the audio streaming platform. i} What is the face value of the bank's debt"? ii) Which of the two projects will Deny choose to undertake? iii) Discuss your ndings. [5 MM] c) Assume that the bank continues to believe that Dany will invest in the audio streaming platform. What is the maximum value for the face value of debt for which Dany will indeed prefer to invest in the audio streaming platform, Discuss your results [It marks] Assume that at time zero Deny nances the audio streaming platform with a mix of debt and equity. The tace value of the outstanding debt that will mature at time t=2 is $75 thousand. At time t-1 Deny has the possibility to Invest in a podcsst production division, The new division requires an Investment of $25 thousand at t=1 and will generate a cash ow of $30 thousand at time t-2. d) Would the exsting equity-holders oi the company be willing to nance the investment in the podcast production division? Explain your result, [5 I'I'Ill'kll