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o uIe StOCKholders benei TTO C3. (Underinvestment) Assume the value of the firm's assets is $10,000 and that the yed an debts of $6,000. If

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o uIe StOCKholders benei TTO C3. (Underinvestment) Assume the value of the firm's assets is $10,000 and that the yed an debts of $6,000. If a catastrophe occurs, the assets are completely destro value of $0. The probability of a catastrophe is 2%. a. What is the value of debt and equity with no catastrophe? What is the value of deh equity with a catastrophe? What is the expected value of debt and equity

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