The firm Davis expects cash flows in one year$$s time from its existing projects, of either $55$ million or $15$ million, with equal probability. The firm is considering a new project that would require an investment of $8$ million today and would result in a certain cash flow in one year$$s time of $12$ million. Davis has debt with face value $25$ million due for payment in one year, and has $8$ million in cash now. Investors are all risk neutral and the risk free rate is zero.

Without the new project, what are the expected values now of the firm$$s equity and debt?

Davis can choose to undertake the project, using its $8$ million cash to invest in it$.$ What will be the expected values of the firm$$s equity and debt, and what is the incremental value to the equityholders from the project?