1. Consider a project with free cash flow in one year of $130,000 or $180,000, with each outcome being equally likely. The initial investment required for the project is $100,000, and the project's cost of capital is 20%. The risk-free interest rate is 10%. a. What is the NPV of this project? CF1=2130000+180000=155000 CFo =100000 b. Suppose that to raise the funds for the initial investment, the project is sold to NPV=20%, investors as an all-equity firm. The equity holders will receive the cash flows of the NPV coup project in one year. How much money can be raised this way - that is, what is the =29212.35 initial market value of the unlevered equity? c. Suppose the initial $100,000 is instead raised by borrowing at the risk-free interest rate. What are the cash flows of the levered equity, and what is its initial value according to M\&M? Equity =200