Monsters Incorporated (MI) is ready to launch a new product. Depending upon the success of this product, MI will have a value of either $100 million, $150 million, or $191 million, with each outcome being equally likely. The cash flows are unrelated to the state of the economy i.e. risk from the project is diversifiable) so that the project has a beta of 0 and a cost of capital equal to the risk- free rate, which is currently 5%. Assume that in the event of default, 20% of the value of MI's assets will be lost in bankruptcy costs. Suppose that at the start of the year, MI has no debt outstanding, but has 5.6 million shares of stock outstanding 1.If MI does not issue debt, what is its share price? 2.If MI issues debt of $125 million due next year and uses the proceeds to repurchase shares, what will be the share price following the announcement of the repurchase? 3.Now, suppose that MI has zero-coupon debt with a $140 million face value due next year. Calculate the value of levered equity, the value of debt, and the total value of MI with leverage. [This question is separate from the previous one]