1. Gladstone Corporation is about to launch a new product. Depending on the success of the new product, Gladstone may have one of four values next year: $150 million, $135 million, $95 million, and $80 million. These outcomes are all equally likely, and this risk is diversifiable. Gladstone will not make any payouts to investors during next year. Suppose the risk-free interest rate is 5%. Assume there are no taxes.

1. What is the initial value of Gladstones equity without leverage?

Now assume Gladstone has zero-coupon debt with a $100 million face value due next year.

2. What is the initial value of Gladstones debt?
3. What is the yield-to-maturity of the debt? What is the expected return?
4. What is the initial value of Gladstones equity? What is Gladstones total value with leverage

Please solve strep by step with formulas