Question 2 5 marks A. Wildcat is an oil and gas exploration company that is operating two active oil fields with a current market value of $200 million each. Wildcat has debt with its current market value of $500 million. A large oil company has offered Wildcat a speculative project in exchange for one of their active oil fields. With this speculative project, there is a 10% chance that Wildcat will discover a major new oil field that would offer a cash flow with the net present value of $1200 million, a 15% chance that Wildcat will discover a productive oil field that would offer a cash flow with the net present value of $600 million, and a 75% chance that Wildcat will not discover oil at all. (1) What is the expected payoff to debt holders if Wildcat accepts the offer? (ii) What is the expected payoff to equity holders if Wildcat accepts the offer? (iii) Briefly explain whether or not equity holders would like to accept this offer?| B. Plump, Inc. has a $20 million loan due at the end of the year and its assets will have a market value of only $15 million when the loan comes due. At the end of the year, Plump will have $2 million in cash and consider two possible alternative uses for this cash. One possibility is to pay the $2 million out to shareholders in the form of a special dividend. The second possibility is to invest the $2 million in a project that offers a net present value of $4 million at that time. (i) Under each of the two alternatives, which one would equity holders prefer? Which one would debt holders prefer? (ii) What is the economic terminology that describes the situation as in (i) and explain whether the situation in (i) is consistent with the shareholder theory or the stakeholder theory