You have been hired by shareholders to make smart investment decisions. The firm currently has 1000 in debt maturing at the end of the year. Debt pays 10% interest. The firm also currently has assets in place that will generate the following expected cash flows at the end of the year: In 1 Year State of World Probability Cash Flows Good 0.5 3000 Bad 0.5 800 You identify a new project that will require an initial investment of 400 today (raised from shareholders) and will pay in one year a cash flow of 600 if the state of the world is Good and 350 if the state of the world is Bad. Assume that all investors are risk-neutral and that both shareholders and bondholders require a 10% rate of return. In addition assume that there are no taxes and no costs of bankruptcy. Should the manager invest in the new project. No, becuase shareholder value will go down to 450 No, becuase shareholder value will go down to 759 Yes becuase NPV is 31.8 Yes, becuase shareholder value will go up to 959 Yes, becuase shareholder value will go up to 895