R+. Remember that in order to take the new investment the company needs to raise new equity from new equity holders for 100 (initial investment required). Also, remember that the firm's management work in the interest of current (old) shareholders. a) For what values of will the new investment be undertaken in State 1 only, State 2 only or both States? (45 Points) (Remember to show that, if you are claiming that equity will not be issued in a State, there is no incentive for manager to issue equity in that State!!) b) What are the values of assets and the value of equity before (that is before the management know the State of the world) and after (that is after the management know the State of the world) the announcement of the project undertaking (or the lack of such announcement). If it is possible, show the value of equity holding for the old shareholders and the new shareholders. (35 Points)