You are an entrepreneur starting a biotechnology firm. If your research is$$ successful, the technology can be sold for $ $30$ million. If your research is$$ unsuccessful, it will be worth nothing. To fund your$$ research, you need to raise $$$$2\mathrm{.}0$ million. Investors are willing to provide you with $$$$2\mathrm{.}0$ million in initial capital in exchange for $50\%$ of the unlevered equity in the firm.

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

b$.$ Suppose you borrow $$$$1\mathrm{.}0$ million. According to$$ MM$,$ what fraction of the$$ firm's equity will you need to sell to raise the additional $$$$1\mathrm{.}0$ million you$$ need?

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

Question content area bottom

Part $1$

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

The market value is $$$

$$

enter your response here million.$($Round to one decimal$$ place.$)$

Part $2$

b$.$ Suppose you borrow $$$$1\mathrm{.}0$ million. According to$$ MM$,$ what fraction of the$$ firm's equity will you need to sell to raise the additional $$$$1\mathrm{.}0$ million you$$ need?

You will need to sell

$$

enter your response here$\%.($Round to the nearest$$ integer.$)$

Part $3$

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

Case $($a$)$ is $$$

$$

enter your response here million.$($Round to one decimal$$ place.$)$

Part $4$

Case $($b$)$ is $$$

$$

enter your response here million.$($Round to one decimal$$ place.$)$You are an entrepreneur starting a biotechnology firm. If your research is successful, the technology can be sold for $$30$ million. If your research is unsuccessful, it will be worth nothing. To fund your research, you

need to raise $$2\mathrm{.}0$ million. Investors are willing to provide you with $$2\mathrm{.}0$ million in initial capital in exchange for $50\%$ of the unlevered equity in the firm.

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

b$.$ Suppose you borrow $$1\mathrm{.}0$ million. According to MM$,$ what fraction of the firm's equity will you need to sell to raise the additional $$1\mathrm{.}0$ 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 is $ million. $($Round to one decimal place.$)$

b$.$ Suppose you borrow $$1\mathrm{.}0$ million. According to MM$,$ what fraction of the firm's equity will you need to sell to raise the additional $$1\mathrm{.}0$ million you need?

You will need to sell $\%.($Round to the nearest integer.$)$

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

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

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