4. i. ii. (30 points-6 each part) A limited liability rm raises $4 million through debt issues [selling bonds] and $2 million through equity issues [selling stock) to pay for a single project. Bondholders are promised to be paid back the value of the bonds plus interest where the interest rate is 25%. The total payoff of the project if it succeeds is $8 million and the payoff if it fails is $3 million. The probability of success is .8. Assume bondholders and stockholders are risk neutral such that their objective is to maximize their respective expected rates of return. Since the rm enjoys limited liability, if the project does not generate enough money to pay off bond holders, the entire payoff will be given to these creditors and stock holders will not receive any of the payoff. What is the expected payoff and the expected rate of return for bondholders? What is the expected payoff and the expected rate of return for stockholders