You are an entrepreneur starting a biotechnology firm. If your research is successful, the technology can be sold for $$35$ million. If your research is unsuccessful, it will be worth nothing. To fund your research,

you need to raise $$3\mathrm{.}7$ million. Investors are willing to provide you with $$3\mathrm{.}7$ million in initial capital in exchange for $30\%$ of the unlevered equity in the firm.

a$.$ What is the total market value of the firm without leverage?

b$.$ Suppose you borrow $$0\mathrm{.}3$ million. According to $MM,$ what fraction of the firm's equity will you need to sell to raise the additional $$3\mathrm{.}4$ million you need?

c$.$ What is the value of your share of the firm's equity in cases a and $b?$

a$.$ What is the total market value of the firm without leverage?

The market value without leverage is $$12\mathrm{.}3$ million. $($Round to one decimal place.$)$

b$.$ Suppose you borrow $$0\mathrm{.}3$ million. According to $MM,$ what fraction of the firm's equity will you need to sell to raise the additional $$3\mathrm{.}4$ million you need?

The fraction of the firm's equity will you need to sell is $28\%.($Round to the nearest whole percentage.$)$

c$.$ What is the value of your share of the firm's equity in cases a and $b?$

The value of your share of the firm's equity:

Case $a$ is $$8\mathrm{.}6$ million. $($Round to one decimal place.$)$

Case $b$ is $$$ million. $($Round to one decimal place.$)$