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The table below presents the pay-off profile for the firm (all values in millions of 5). Assume that the manager's objective is to maximize the

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The table below presents the pay-off profile for the firm (all values in millions of 5). Assume that the manager's objective is to maximize the value to current shareholders and that the manager knows the true state of the world, but the public does not Good State Bad State Probability 70% 30M PV of Assets in Place 155 60 Investment Cost 30 30 33 35 PV of New Investment NPV of Investment 5 3 05 Value of Assets with Investment 175 Suppose that the manager decides to go forward with the $30M issuance, given the APV - the market value of the firm will be ___ because the public wil learn 142M, nothing because the manager would insue in both states 175M, that the manager knows the firm is in a good state 65M that the manager knows the firm is in a bad stato

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