Sunshine Corp's economists estimate that a good business environment and a bad business environment are equally likely for the coming year. The managers of Sunshine must choose between two mutually exclusive projects. Assume that the project Sunshine chooses will be the firm's only activity and that the firm will close one year from today. Sunshine is obligated to make a $4,800 payment to bondholders at the end of the year. The projects have the same systematic risk but different volatilities. Consider the following information pertaining to the two projects. Assume that the discount rate is 0. Economy Probability Bad 0.50 Good 0.50 Low- Volatility Project Payoff $4,800 4,840 High- Volatility Project Payoff $3,800 5,000 2-1. What is the expected value of the firm if the low-volatility project is undertaken? 1 point a-2. What is the expected value of the firm if the high-volatility project is undertaken? 1 point a-3. Which of the two strategies maximizes the expected value of the firm? 1 point b-1. What is the expected value of the firm's equity if the low-volatility project is undertaken? 1 point 1-2. What is the expected value of the firm's equity if the high-volatility project is undertaken? point c. Which project would Sunshine's stockholders prefer? Explain. 1 point Suppose bondholders are fully aware that stockholders might choose to maximize equity value rather than total firm value and opt for the high-volatility project. To minimize this agency cost, the firm's bondholders decide to use a bond covenant to stipulate that the bondholders can demand a higher payment if Sunshine chooses to take on the high