Question 1 (16 points) Consider ABC Ltd., one-asset firm with no liabilities. Assume that the asset will generate end- of-year cash flows of $150 each year for two years and then will have zero value. Assume also that the interest rate in the economy is 10%. Taking into account that the economy can be in a "bad" state or a good state during each year. If it is in the bad state, end-of-year cash flows will be $100 for the year. If it is in the good state, however, end-of-year cash flows will be $200 for the year. Assume that during each year the bad state and the good state each occur with probability 0.5. Our assumption that state probabilities are the same each year implies that the state realizations are independent. That is, the state realization in year 1 does not affect the probabilities of state realization in year 2. Also, assuming dividend irrelevance and risk-neutral investors. Required a. Given these ideal conditions, please calculate the expected present value of ABC's future cash flows at time 0, and prepare ABC's opening balance sheet at time 0. (6 points) b. Assume that the year 1 state realization is a bad economy, please prepare the income statement for year 1 and the balance sheet at the end of year 1 for ABC Ltd. (10 points)