Question: A firm has a project that in one year will generate $100 million if things go well, $70 million if things are average, and $40

A firm has a project that in one year will generate $100 million if things go well, $70 million if things are average, and $40 million if things go poorly. Each scenario has a probability of 1/3. The firm has debt of $50 million due next year. If bankruptcy occurs, bankruptcy costs will be 27% of assets. What is the value of the levered firm, V_L? Ignore discounting for this calculation.

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