Homework: Homework 6 Si Score: 0.29 of 1 pt 4 of 33 (33 complete) HW Score: 97.84%, 32 29 of 3 P 16-1 (similar to) Question Help Consider a project with free cash flows in one year of $135.276 in a weak market or $161,437 in a strong market, with each outcome being equally likely. The initial investment required for the project is 50,000, and the projects unlevered cost of capital is 11%. The risk-free interest rate is 3% (Assume no taxes or distress cos a. What is the NPV of this project? b. Suppose that to raise the funds for the initial investment, the project is sold to investors as an all-equity firm. The equity holders will receive the cash flows of the project in one year. How much money can be raised in this way that is what is the initial market value of the unlevered equity? c. Suppose the initial $60,000 is instead raised by borrowing at the risk-free interest rate. What are the cash flows of the levered equity in a weak market and a stro market at the end of year 1, and what is its inital market value of the levered equity according to MM? Assume that the risk free rate remains af its current level an ignore any arbitrage opportunity a. What is the NPV of this project? The NPV is $ (Round to the nearest dollar) Homework: Homework 6 Si Score: 0.29 of 1 pt 4 of 33 (33 complete) HW Score: 97.84%, 32 29 of 3 P 16-1 (similar to) Question Help Consider a project with free cash flows in one year of $135.276 in a weak market or $161,437 in a strong market, with each outcome being equally likely. The initial investment required for the project is 50,000, and the projects unlevered cost of capital is 11%. The risk-free interest rate is 3% (Assume no taxes or distress cos a. What is the NPV of this project? b. Suppose that to raise the funds for the initial investment, the project is sold to investors as an all-equity firm. The equity holders will receive the cash flows of the project in one year. How much money can be raised in this way that is what is the initial market value of the unlevered equity? c. Suppose the initial $60,000 is instead raised by borrowing at the risk-free interest rate. What are the cash flows of the levered equity in a weak market and a stro market at the end of year 1, and what is its inital market value of the levered equity according to MM? Assume that the risk free rate remains af its current level an ignore any arbitrage opportunity a. What is the NPV of this project? The NPV is $ (Round to the nearest dollar)