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Economists at The Wells Corporation estimate that a good business environment and a bad business environment are equally likely for the coming year. The managers

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Economists at The Wells Corporation estimate that a good business environment and a bad business environment are equally likely for the coming year. The managers of Wells must choose between two mutually exclusive projects. Assume that the project Wells chooses will be the firms only activity and that the firm will close one year from today. Wells is obligated to make a $4,500 payment to bondholders at the end of the year. The projects have the same systematic risk, but different volatilities Consider the following information pertaining to the two projects: Low High Economy Probability Volatility Volatility Payoff Payoff Bad 0.5 4448 3551 Good 0.5 5449 5537 What is the expected value of the firm if the low volatility project is undertaken? (Round answer to 0 decimal places. Do not round What is the expected value of the firm if the high volatility project is undertaken? (Round answer to 0 decimal places. Do not round What is the expected value of the firm's equity if the low volatility project is undertaken? (Round answer to O decima places. Do not round intermediate What is the expected value of the firms equity if the high volatility project is undertaken? (Round answer to 0 decimal places. Do not round intermediate

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