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Referring to the different options given in the table below,

Referring to the different options given in the table below,

Referring to the different options given in the table below, calculate the payoffs for lenders and shareholders consequent to the decision to finance on-balance sheet or off-balance sheet for Project 2:

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Scenarios Hypothesis Debt Project 1 (assets in place) Debt Project 2 (new project) Expected cash flows project 1 (assets in place) Expected cash flows project 2 (new project) 200 100 75 200 100 75 200 100 150 200 100 150 100 180 100 180 Solution On-balance Off-balance Scenario Scenario 2 Scenario 3 Scenario 4

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