Question A firm will be worth cither $10000 or $12000 with equal probabilities in one year. The firm has the following capital structure: Equity Stocks: 3000 outstanding shares. Debt Bonds: Face value is $14000 duc in one year. The firm may issue new equity to undertake a risk-free project that requires an initial investment of $1000 with a rate of return of 300%. Which of the following is referred to as the under-investment problem? Possible Answers * The firm will undertake the project but only equity holders will benefit from the expected payoff The firm will undertake the project but only debt holders will benefit from the expected payoff c The firm will NOT undertake the project as only equity holders will benefit from the expected payoff The firm will not undertake the project as only debt holders will benefit from the expected payoff. The firm will NOT undertake the project as both equity and debt holders will not benefit from the expected payoff