There is a $100M property (Property A) that will be worth either $120M or $90M in one year with an equal probability (50%/50%). In this exercise, you will analyze the return to a non-recourse collateralized loan and the levered equity.

\What is the present value (for the lender) of a $95M, one-year, zero-coupon, riskless loan? The riskless rate of return is 1%. $ ______ M Hint: The borrower promises to pay $95M at t =1 and no other payment.