Wildcat is an oil and gas exploration company that is operating two active oil fields with a current market value of $200 million each. Wildcat has a debt with its current market value of $500 million. A large oil company has offered Wildcat a speculative project in exchange for one of their active oil fields. With this speculative project, there is a 10% chance that Wildcat will discover a major new oil field that would offer a cash flow with the net present value of $1200 million, a 15% chance that Wildcat will discover a productive oil field that would offer a cash flow with the net present value of $600 million, and a 75% chance that Wildcat will not discover oil at all.

(i) What is the expected payoff to debt holders if Wildcat accepts the offer?

(ii) What is the expected payoff to equity holders if Wildcat accepts the offer?