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Question 35 3 pts (3 points) Mequon Inc., a construction firm financed by both debt and equity, is undertaking a new project. If the project
Question 35 3 pts (3 points) Mequon Inc., a construction firm financed by both debt and equity, is undertaking a new project. If the project is successful, the value of the firm in one year will be $300 million, but if the project is a failure, the firm will be worth only $160 million. The current value of the company is $180 million, a figure that includes the prospects for the new project. The company has zero coupon bonds due in one year with a face value of $200 million. Treasury bills that mature in one year have an EAR of 7 percent. The company pays no dividends. Use the two-state option pricing model to find the current value of the company's debt and equity
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