Faced by financial distress during the Covid-19 pandemic, Distress Corp. is deciding whether to invest in a new project. The project would have to be financed by equity with the initial cost of $2,500. The project will return $2,500 in one year. The discount rate for both bonds and stock is 10% and the tax rate is zero. The predicted cash flows are $4,500 in an economic boom, $3,000 in a normal period and $1,000 in a recession. Each economic outcome is equally likely, and the promised debt repayment is $3,000. 1) What is the expected payoff for bondholders before the project? (2.5 marks) 2) What is the expected payoff for bondholders assuming that the company takes the project? (2.5 marks) 3) What is the expected payoff for shareholders before the project? (2.5 marks) 4) What is the expected payoff for shareholders assuming that the company takes the project? (2.5 marks) 5) Would shareholders want managers to take the project? (2 marks) Why? What selfish strategy does this case illustrate? (3 marks) 6) Do you agree or disagree with the following statement? A firm's stockholders will never want the firm to invest in negative NPV projects in any circumstances (2 marks) Why? (3 marks)