v.2 mate Question completion Status: 5 6 7 9 10 11 12 13 14 15 16 17 18 19 20 :: MATCHES: QUESTION 1 Using the Modiglian Miller (MM) theory in a perfect market, you want to evaluate a project and how to finance it. The project has free cash flows in one year (year 1) of 590 in a weak economy or 5120 in a strong economy. There is 75% chance that the economy is strong. The initial investment required for the project is $80, and the projects cost of capital is 10%. The risk free interest rate is 5%. Suppose that to raise the funds for the initial investment, you can both raise some amount of levered equity and borrow $80 at the risk free interest rate. For the net present value (NPV) of the project and the market value of the levered equity, which of the following statements i O A The NPV is $22.27 and the market value of the levered equity is $22.27 OB. The NPV is $22.27 and the market value of the levered equilty is 102.27 OC The NPV is $29.55 and the market value of the levered equity is 5102:27 D. The NPV is $29.95 and the market value of the levered equity is $22.27 QUESTION 2 11 A project manager is evaluating a project and initially forecasts that the project will lasts for four years and has its annual marketing and support costs of $1,000,000 and its annual revenue of $10.000.000. The project pays a 40% tax rate on its pretax income and its cost of capital is 154. While analysing a situation that competitors can run their big promotion programs during the project's life, the manager proposes one solution to the situation by increasing the marketing and support costs by 60% of the originally forecasted level and simultaneously lowering the forecasted revenue by 30% of the originally forecasted level. The change in the net present value (NPV) of the project is cetto: A. 56.656.717.44 OB. 86.656,717.44 OC 56.166.753.26 OD 56,166.753.26