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Question 1 Suppose you are an investor seeking to find new opportunities to invest. You have identified two firms: L1 Corporation and BT Enterprises. Li Corporation is debt free, while BT Enterprises is highly leveraged. Each firm is run by a manager/ entrepreneur, who can exert two levels of effort: high or low. The project undertaken by the manager of each firm yields either a high return RS > 0 or a low return RF 2 0, with RF 0 or a low return R> 0. Does the amount of leverage of each firm affect its market value? Explain your answer. (40% of the marks)