Hiroko Fashion Corporation (HFC) can pursue either project Dress, or project Cosmetic with possible payoffs ($ million) at year-end as follows: Bad Economy (probability = 30%) Good Economy (probability = 70%) Project Dress 2 9 Project Cosmetic 7 6 Each project costs $6 million at the beginning of the year. Assume there are no taxes, there are no direct bankruptcy costs, all investors are risk-neutral, and the risk-free interest rate is zero. 1. Which project should HFC pursue if it is all-equity financed? Why? 2. If HFC has a $5 million bond obligation at the end of the year and the cash flow from the bond can be used for other projects, which project would its stockholders want to pursue? Why